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Property

Evolve Legal - Property

Property

Property settlement requires that the court consider the parties’ initial, during and post-separation contributions to the property pool as well as parties differing ‘future needs’. This includes property that each party brought into the relationship, the financial position and wealth of the parties, financial contributions, non-financial contributions, and contributions made for the welfare of the family generally.

Where the time limit for commencing property proceedings has expired, where parties seek a release from potential future claims of spousal maintenance, or when the agreement is unlikely to be approved by a Registrar of the court, the parties may opt to enter into a financial agreement. This allows parties to opt out of the court’s jurisdiction to deal with property and spousal maintenance matters. Spousal maintenance creates liability for one party to maintain the other person to the extent that they are reasonably able to do so, and that the other party is unable to support themselves adequately.

Consent Orders are a way by which you and your ex-partner can document and formalise the division of assets and/or parenting arrangements. For any property settlement proceedings, including related divorce proceedings, please ensure that you observe the relevant statutory time limits. Further, a pre-nuptial agreement is a type of Financial Agreement which contains the details of how your property is to be divided upon the unfortunate event of separation. This may be helpful in terms of protecting your assets, especially where there is a financial imbalance between the parties.

Initial and post separation contributions  

When the court looks to altering parties’ interests in property as a result of separation, they will consider the initial and post separation contributions towards the property pool to determine the division of distribution that each party shall receive. These contributions must have been made towards the acquisition, conservation and improvement of the property pool.

The court places a large emphasis on the property that each party brought into the relationship and how their financial position enabled the parties to increase the property pool and wealth of the parties. For example, if one party owned a business at the commencement of the relationship and that business was the main source of income for the parties over the course of the relationship, then that party may receive an adjustment in their favour. Similarly, if one party owned a property and the equity in that property was used to purchase the matrimonial home then they might receive an adjustment in their favour.

If the relationship is short in length and the property pool at the date of separation largely comprises the property owned by the parties at the date of commencement of the relationship, it is possible that the court may make an adjustment to the party who brought those assets into the relationship.

In terms of the length of the relationship, the weight given to the disparity between each of the parties’ initial contributions will typically diminish as the relationship gets longer.

Contributions are assessed by the court at the date of trial, and not at the date of separation. Therefore, post separation contributions become particularly relevant in determining the overall property distribution. Post separation contributions include the following:

  • Financial contributions made to the acquisition, preservation and maintenance of property.
  • Non-financial contributions made to the acquisition, preservation and maintenance of property, such as renovating the family home.
  • Contributions made for the welfare of the family.

Financial agreements  

A financial agreement is a document that allows couples to opt out of the court’s jurisdiction to deal with property and spousal maintenance matters under the Family Law Act 1975. There are three difference kinds of Financial Agreements:

  1. Agreements entered into prior to marriage.
  2. Agreements entered into during marriage.
  3. Agreements entered into after divorce.

Parties may opt to enter into a financial agreement under circumstances where the time limit for commencing property proceedings has expired, where parties seek a release from potential future claims of spousal maintenance, or when the agreement is unlikely to be approved by a Registrar of the court because of the structure or the payment terms of the agreement.

In order for a financial agreement to be legally binding, it must possess the following key features:

  • It must be a written agreement as to how the parties’ property and financial resources are to be dealt with upon breakdown of the marriage, and/or dealing with spousal maintenance;
  • It must be made without the existence of any other agreement;
  • It must be stated that it is an agreement made under either s90B, 90C or 90D of the Family Law Act 1975;
  • It must contain a separation declaration signed by at least one of the parties stating that they have separated and are living separately and apart when the declaration was signed, and, in the opinion of the parties making the declaration, there is no reasonable likelihood of cohabitation being resumed;
  • For any clause in relation to spousal maintenance, the recipient must be clearly stated and the amount payable of their maintenance;
  • As a release from future maintenance, it must be stated that the recipient is able to support themselves without an income tested pension, allowance or benefit;
  • The agreement must be signed by both the parties.

If the agreement is made after 4 January 2010, then it is to be signed by parties who have each been provided with a signed statement from their legal practitioner that advice was provided to them about the effect of the agreement on the rights of that party and about the advantages and disadvantages, at the time the advice was provided, to that party of making the agreement, and a copy of that statement has been provided to the other party or their lawyer.

Spousal maintenance  

Under section 72(1) the Family Law Act, a party to a marriage is liable to maintain the other person to extent that the payer is reasonably able to do so if, and only if, that other party is unable to support themselves adequately whether:

  1. By reason of having the care and control of a child of the marriage who has not attained the age of 18 years;
  2. By reason of age or physical or mental incapacity for appropriate gainful employment; or
  3. For any other adequate reason.

The threshold test for spousal maintenance is therefore twofold: is the payer reasonably able to pay and is the applicant unable to support herself or himself adequately.
The test for de facto maintenance claims is reflected under sections 90SD to 90SF of the Family Law Act 1975.

The deadline for issuing an application for spousal maintenance is 12 months after a divorce order has taken effect, except by leave of the court or consent of the parties. If applying out of time, the applicant must satisfy the court that at the time of the time limit expiring they were unable to support themselves without an income-tested pension, allowance or benefit.

Consent orders  

Consent Orders are a way by which you and your ex-partner can document and formalise the division of assets and / or parenting arrangements.

Parties must first come to an agreement regarding property settlements and / or the parenting arrangements. Once both parties’ consent to the terms and are happy to move forward, an Application for Consent Orders and Minutes of Consent can be filed with the Federal Circuit and Family Court of Australia.

The Application for Consent Orders briefly sets out the orders you wish the Court to make. The Minutes of Consent details the terms of the agreement. Financial and parenting arrangements can be applied for in the one application.

Once approved by the Court, the Consent Orders will become legally binding and enforceable upon the parties. You can vary the terms of the Orders but only by further order of the Court or further written agreement between the parties. Consent Orders may be terminated but only in limited circumstances.
Consent Orders offer the highest level of protection for both parties which is why they are the most recommended method of formalising your property settlement and / or parenting arrangement. They are also more cost effective and much less stressful than litigating in Court.

Statutory time limits  

It is important to be aware that time limits restrict the time frame you have to bring an action in the Federal Circuit and Family Court of Australia. Once a time limit has expired, a party will be prevented from starting a claim without first applying for leave of the court.

An application for a property settlement matter must be commenced with two years from the date of separation in the case of de facto couples, and 12 months after a divorce order has taken effect for married couples.

If applying to the to seek leave to commence proceedings out of time, you must be able to prove that hardship would be caused if you are prevented from making a claim outside of the time limit. Hardship requires demonstrating more than just a loss. It must be that the applicant has a case worth pursuing and a genuine chance of succeeding in that case. To be successful in obtaining an extension of time you must also be able to show the reasons for not being able to make the application before the time limit expired.

Spousal maintenance claims must also be made within two years of the date of separation in the case of de facto couples and one year from the date that the divorce becomes effective for married couples.

For divorce proceedings, married parties must wait 12 months after the date of separation to apply to the court for a divorce order. It is a requirement that the parties satisfy the court that there is no likelihood of the parties resuming the relationship and that they have lived separately and apart for at least 12 months.

An appeal of a Federal Circuit and Family Court of Australia decision must be made within 28 days of the order being made.

Pre-nuptial agreements  

A prenuptial agreement is a type of Financial Agreement which contains the details of how your property is to be divided upon the unfortunate event of separation. By entering into a prenuptial agreement, you effectively opt out of the court’s jurisdiction to divide your property in accordance with the Family Law Act 1975 upon separation. Parties generally enter into these kinds of agreements to avoid the need to engage in costly legal proceedings in the event that they are to separate.

The Family Law Act 1975 provides that both heterosexual and same-sex couples can enter into prenuptial agreements.

Advantages of entering into a prenuptial agreement include that you are able to protect your assets and maintain some level of control over those items. This is particularly beneficial in circumstances where there is a significant difference between one party’s assets as opposed to their partner. In addition, a prenuptial agreement can be changed by agreement between the parties. Lastly, parties are provided with certainty about how their assets and liabilities are to be divided upon separation.

There are some important matters that should be taken into account when entering into a prenuptial agreement, to ensure that the agreement is not set aside:

  • The agreement must not have been obtained by fraud.
  • The legal and technical requirements of the agreement must be met (see ‘Financial Agreements’ above).
  • Both parties must have entered into the agreement at their own free will and must not have been pressured into it.
  • The terms of the agreement must be capable of being carried out.

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