When you separate from a spouse or de facto partner, you may need to consider how to divide your ‘marital’ assets between yourself and your spouse or de facto partner.
Separation of assets (also known as property settlement) is a different process from getting a divorce.
There are time limits that apply to applications in the Family Court for property settlement. An application for property settlement can be made (by agreement or otherwise) any time from separation and up to one year from the date of a divorce order taking effect (without requiring leave of the Court). In the case of a de facto couple, an application for property settlement can be made (by agreement or otherwise) any time from separation and up to two years following the date of separation.
Separating your assets can be a complicated process, so you should get reliable legal advice from an experienced family law lawyer as soon as possible.
Here’s what you should consider when you commence the process of separating your assets.
Document or estimate the value of your assets, liabilities and financial resources
When you and your spouse/partner separate, it is useful to obtain copies of all your financial documents such as recent bank statements, credit card statements, mortgage balances, superannuation statements and share certificates.
Try to estimate the current value of any vehicles, property(ies), superannuation, business(es), family trust(s) and/or other asset(s) or investments you or your ex spouse/partner might have an interest in, regardless of whether it is held in joint names or sole name(s), as well as the value of any liabilities.
In the event there is disagreement between you and your ex spouse/partner as to the current market value of any property, you may wish to jointly instruct a valuer to provide you with an independent valuation of your asset(s), unless the disagreement can be resolved by way of free market appraisal(s), internet searches on redbook/carsales.com.au, etc.
It is recommended that you give your lawyer copies of all your financial documents and valuations obtained, and notify them of the date that you and your ex began living together, and the date of separation.
If both parties agree on how to divide assets
Where both parties can agree on how property settlement is to be effected, the Family Court does not necessarily need to get involved (other than making orders by consent if a Form 11 Application is made seeking this). There are a number of advantages to having consent orders made by the Family Court, including an order that is legally binding and enforceable, nominal stamp duty on the transfer of a jointly owned property, etc., which your lawyer can explain to you in further detail.
Reaching agreement early on can be beneficial for both you and your ex partner, as it will save you the expense and stress of going through the Family Court. Family Dispute Resolution/mediation and other alternative dispute resolution processes may assist you and your ex partner in reaching an agreement.
It should be noted that the Family Court will only make property settlement orders that are deemed to be just and equitable to both you and your ex partner.
If both parties do not agree
If you and your ex partner are unable to agree on how to separate your assets and liabilities, you can apply for financial orders in the Family Court.
There are, however, pre action procedures that should be followed before making such an application, which your lawyer can explain to you in further detail.
Ultimately, if agreement is not reached at the various stages of the proceedings, the Family Court will usually hear evidence at a trial from both you and your ex partner (and from any witnesses that either of you may decide to call, and from any expert witnesses appointed along the way) and a judicial officer will decide how to divide your marital assets in a way that they consider to be just and equitable.
The Family Court has very wide powers to alter the property interests of you and your ex partner and the judicial officer has a wide discretion to apply the law to the facts of your particular case.
The Family Court doesn’t follow any particular formula when they decide on the separation of assets, however they will consider the following steps (in addition to any other factors deemed relevant to your case), in accordance with the Family Law Act 1975/Family Court Act 1997, to arrive at what the Court deems to be just and equitable (if it is deemed just and equitable to make orders):
- identify and value the assets, liabilities and financial resources of each party;
- identify and assess the financial contributions made by each party (including initial financial contributions, financial contributions during the relationship and post separation, any inheritances, gifts or payouts that either party received, any loans from family, etc);
- identify and assess the non-financial contributions (such as improvements to the property, etc);
- identify and assess the contributions made by each party as homemaker and parent (if applicable);
- identify and assess the future needs of each party, by considering their age, health, care of children (if applicable), financial resources, income earning capacities, etc, and decide whether any adjustment should be made to the contributions based assessment by reason of these factors.
Protect yourself with the right legal advice
Getting good legal advice is the smartest thing you can do when going through the process of separating your assets. Even parties who agree on how to divide their assets should still seek legal advice regarding how to make their agreement for property settlement legally binding.
Friedman Lurie Singh & D’Angelo has five offices (in Perth, Rockingham, Joondalup, Jindalee and South Lake), with a team of highly trained family lawyers experienced in divorce, de facto separation, spousal maintenance, parenting issues and property settlement. They are focused on providing practical advice and getting the best possible outcome for their clients, during what is often a challenging time in their lives. For reliable advice on separating your assets, call FLSD on 08 9254 0000 or visit www.flsd.com.au