Splitting property and other assets during divorce and separation
If your relationship breaks down, you and your former partner will have to think about how to split up your property and other aspects of your finances like superannuation and debts. You also need to think about whether one of you should give financial support to the other.
You can sort this out yourselves but if you can’t agree, a court will need to decide for you.
This is handled by the Federal Circuit and Family Court of Australia for both married and de facto couples, except in Western Australia, where former couples need to use the Family Court of Western Australia.
What does property and finance include?
If you’re going through a separation or divorce, you must tell each other and the court about all your property and finances.
Property and finances include:
- the family home
- cars, household contents and other personal property
- money in banks, building societies, credit unions and other financial institutions
- investments in real estate
- interests in businesses, shares in companies and life insurance policies
When you agree on splitting assets: consent orders and financial agreements
If you and your former partner agree on how to split your assets, it can be a good idea to formalise your agreement and make it legally binding. You can do this by:
- applying for a consent order
- making a binding financial agreement.
A consent order is when you put your agreement into a legal document and ask the appropriate court to make legally binding orders about it.
The court will make a consent order only if it thinks that your agreement is properly written and fair.
You can make a binding, legally enforceable agreement about what will happen to your financial arrangements if your relationship breaks down.
You can make a financial agreement before your marriage or de facto relationship, during the relationship or after the relationship ends. For a financial agreement to be legally binding, both you and your partner must get independent legal advice and you must both sign the agreement.
Financial agreements can cover:
- financial settlement, including superannuation entitlements
- financial support (maintenance) of one or other partner after a relationship ends.
The court can say that your financial agreement is invalid if you didn’t get independent advice or the agreement involves fraud – for example, if one of you didn’t tell the other everything about your property and finances.
Going to court can sometimes end up costing a lot of money. If you and your partner can agree on how to split your property and finances, it might be best for you, your ex-partner and your children.
When you can’t agree on splitting assets or financial support: financial orders
If you and your former partner can’t agree on how to split your property and money, lawyers can help you negotiate an agreement. You might have to start court proceedings. This is called applying for a financial order.
There are 2 types of financial orders:
- Property order: this deals with the division of property, income and other financial resources.
- Spousal maintenance order: this deals with financial support of former partners.
Applying for a financial order
When you apply for a financial order, you go through several steps. These steps usually include handing over to the court certain financial documents and briefly attending court in person.
Before you can go to court, you’ll probably need to have a discussion with a court official called a registrar. They’ll try to help you and your former partner agree or ask you both to attend a mediation session.
It’s a good idea to consider mediation. A qualified mediator can help you work out your property division and other financial matters.
Mediation might not be appropriate if there has been violence or abuse in your relationship.
If you still can’t agree after mediation, the court will have to decide for you. This is called a court hearing.
The court will look at the facts of your individual case when it decides. There’s no formula or standard division of property and money, so different families get different decisions.
When making a decision, the court takes the following general principles into account:
- what you have and what you owe
- how much money and other financial contributions – like inheritances – you’ve each put into the marriage
- what non-financial contributions you’ve put in, including caring for children and looking after your home
- what you need for the future – for example, to look after children or care for your own health
- what you might earn in the future.
The court needs to agree that the financial order is fair.
It might be cheaper and quicker to use a private arbitrator to help you agree on how to split your property and finances. An arbitrator is like a judge that you both pay to give a decision. When the arbitrator’s decision is registered with the court, it acts in a similar way to a judge’s order. It’s a good idea to talk to a lawyer about whether arbitration is the right choice for you.
Enforcement of consent orders, financial orders and financial agreements
You can enforce a consent order, financial order or financial agreement by using the Family Law Act. It’s best to get legal advice about this. Your lawyer can write to your former partner to try to get them to abide by the order or agreement. If that doesn’t work, your lawyer can issue enforcement proceedings in court.
Under the Family Law Act, you have a responsibility to support your former partner financially after your relationship ends if they can’t meet daily living expenses from their own resources and you can help meet those expenses. This is called spousal maintenance.
You don’t automatically get or have to pay spousal maintenance. You and your former partner can formalise any payments that you agree on by putting the details into a consent order or financial agreement.
If a court is deciding on spousal maintenance, it looks at what you both need, as well as several other things, including:
- how old and how well you are
- how much you earn and owe and your other financial resources
- how much you can work
- whether the relationship has affected your ability to earn income
- whether you have remarried or are living with a new partner.
You must apply for spousal maintenance within 12 months of a divorce becoming final or within 2 years of the end of a de facto relationship. After this time, the court might allow you to apply if there are special circumstances.