'It's The Law' - Law and separation

An unfortunate reality is that many romantic relationships end in separation. What will happen to the property of the parties to the relationship is not typically the first thought of the parties at this time. However, how the property is treated can have a lifelong impact on the parties. If an agreement cannot be reached about how this division can be made, a party may apply to the court to have orders made about the property of the parties.

Generally, for people who were married, it is important that applications to the court for property orders are made within twelve months from the divorce.

For those who were in a de-facto relationship, property applications should be made within two years of the relationship breakdown.

In both situations those time frames can be extended by the court in special situations related to hardship suffered by one of the parties or their children.

In making a property order the court firstly identifies the current assets and liabilities of the parties. The court will then consider the contributions of the parties to the property.

Contributions can be direct financial contributions (such as payment of the mortgage on the home), indirect financial contributions (such as payment of all groceries and utilities of the household whilst the other spouse paid the mortgage), non-financial contributions (such as a builder spouse who carries out renovations to the home) and contribution to the welfare of the family (such as a stay at home parent who cares for the children whilst the other parent works).

Many other matters are considered by the court in reaching a fair division of property including the age and state of health of each of the parties and the financial resources of each of the parties.

Prior to making the orders proposed the court must consider whether the order proposed is fair in all the circumstances.

Usually people ending their relationship will be better off if they can agree on how to split their property without contesting it in court. This is due to the costs contested litigation brings. Accordingly, it is worth considering the alternatives to contested litigation.

1. No formal agreement is made

Sometimes the parties come to an agreement about how to divide their assets between themselves or just keep what assets they had in their names/possession without any formal agreement being made. This is a poor path to take as it does not provide finality to the property affairs of the parties and one partner may make a claim on the other’s assets through an application to the court at a later date.

2. Binding Financial Agreement

An agreement reached can be recorded in what is known as a financial agreement. There are a number of requirements for a financial agreement to be legally binding on the parties. These requirements include that it be signed by both parties, that each party receive independent legal advice from a legal practitioner about the effect of the agreement on the rights of that party and that each party receive a statement from their legal practitioner certifying that independent advice was provided.

The terms in a binding financial agreement do not have to be fair, and it is possible for one party to have a more advantageous settlement than the other.

3. Consent Orders

Normally the best option for finalising a couple’s assets is for the parties to jointly apply to a Court for consent orders. The process for consent orders is much simpler to the process to the court process when the parties are in dispute about the appropriate settlement. However, in both circumstances, full and frank disclosure is required meaning that the parties must have a full picture of each other’s assets and liabilities (usually through the provision of valuations and statements). The Court will then only make orders that the parties have agreed upon, if the Court thinks they are fair. Consent Orders may be applied for after contested litigation is begun.

If you have separated from your spouse, it is important to speak to a lawyer about what your rights and obligations are.

This article is intended to be used as a guide only. It is not, and is not intended to be, advice on any specific matter. Neither Patrick nor O’Brien Lawyers accept responsibility for any acts or omissions resulting from reliance upon the content of this article. Before acting on the basis of any material in this article, we recommend that you consult your lawyer.