We often get asked to assist clients in obtaining a divorce… but do they actually mean a “divorce” or are they referring to a “property settlement” or even “parenting orders”? The terminology can be confusing! This article explores some of those terms in order to give you some direction in settling your affairs after separation.
What is a property settlement and how does it differ from a divorce?
property settlement is the process of dividing assets, such as your house and superannuation, after your divorce. If you are thinking of separating from your partner, you need to make sure that you understand this process so that you get the best outcome. If you have recently separated and want to discuss a property settlement, you should contact your lawyer straight away.
A property settlement is different to a divorce. A divorce is an order of the court dissolving a marriage between two people. There is no property settlement involved in a divorce, unless you get your lawyer to help you with both the divorce and the property settlement together. You should speak to your lawyer if you would like to apply for a divorce and your lawyer will be able to answer the following: -
- How to divorce in Australia;
- How long does it take to get a divorce in Australia;
- What is separation under one roof;
- Time limits for starting a property settlement and the relationship with an application for divorce;
- What is the cost of divorce; and
- Any reduced fees for divorce that you might be entitled to.
Property settlement and what is considered
In Australia, after two people separate, a lawyer can assist in ascertaining how much of the property pool each party is entitled to. There is no presumption in Australia that each party should walk away from a relationship with 50% of the property pool. Lawyers, and the court if necessary, will look at each case on its merits and its facts and circumstances and come to a conclusion that is appropriate in all of the circumstances.
When you engage a laywer, you will notice that property matters are generally approached in terms of percentage splits, that is 50% to the wife and 50% to the husband or visa versa OR 40% to the husband and 60% to the wife or visa versa (as an example – this depends on the case).
What are the time limits?
The first thing that you need to consider when you separate from your partner is the time limit for a property settlement. Currently, you have 12 months from the date of your divorce to bring an application to the court for a property settlement. If you are not married and are instead in a de facto relationship, you must bring an application for property settlement within two years after the date of separation.
Sometimes, you might not need to go to court in order to divide your property in a legally enforceable way. The Family Law Act 1975 (Cth) allows parties to reach an agreement privately about what they would like to happen in a property settlement and the court can make an order once you have agreed. These type of orders are called “consent orders” and are useful if you and your ex parter are amicable or can reach an agreement through negotiation. It is hard to make an order for property settlement if you are more than 12 months from your date of divorce or more than 2 years from the end of your de facto relationship for de facto couples. You should contact your lawyer straight away if you are served with an application for divorce and have not discussed a property settlement with your ex partner.
This is different to a divorce order. A divorce can be applied for one year after separation.
What is the property pool?
The “property pool” is a term that refers to all of the assets, liabilities and superannuation of both you and your ex-partner. Ascertaining the property pool is the first step in division of property and is essential to reaching an agreement with you ex-partner. Often, the property pool can be identified easily and without any complex intervention from your lawyer. Sometimes, matters may be more complicated if you have assets held in companies or trusts, your own business or interest in a business, or unusual superannuation entitlements such as military superannuation or self-managed superannuation funds.
Sometimes your matter may be further complicated if you believe your ex-partner is hiding property, or if either of you have acquired or disposed of any assets since you have separated.
Who made the contributions?
Contributions to the relationship are a big part of the considerations that need to be made when negotiating a property settlement. When figuring out how much of the property pool you might receive, your lawyer (and the court) should look at several factors, including who brought what in to the relationship in terms of money, who made the significant contributions throughout the relationship in terms of money, childcare, housekeeping, cleaning and cooking, book-keeping and even outdoor maintenance and general renovations. Just because one party earned a wage and was the primary “breadwinner” of the household does not necessarily mean that they will be awarded a higher percentage of the property pool. Arguably, home duties such as those mentioned above, are considered just as important a contribution to a relationship!
What are your future needs?
Your lawyer (and the court) should consider what you will need in future in order to get back on your feet. Relevant factors with relation to future needs can be, for example:-
- Do you and your ex-partner have children under the age of 18, and if so, how many of those children live with you and how long do the children spend in each household?
- Do you or your partner have any health issues? Do those health issues prevent you from earning a wage or gaining and maintaining meaningful employment?
- Is there a disparity in income? That is, do you earn significantly more or less than your partner, and if you do, is there a chance that your ex-partner could earn a comparative wage to you? What are your employment prospects in the future?
- Do you have any funds overseas, trust funds, any pensions or money coming in that has not been considered in the asset pool?
- What property do you currently hold? That is, what have you and your ex-partner taken from the relationship?
When entering into a property settlement agreement, you and your ex-partner may wish to consider entering into children’s arrangements also, should you have any children who are under the age of 18. This is what most people refer to when they are taking about “child custody”.
Children’s arrangements can be included in consent orders alongside property orders, and this is often a cheaper way of dealing with all of the issues of separation in one hit. Children’s orders, commonly referred to as parenting orders, entered into by consent can deal with a vast range of issues such as:-
- Who the children will live with;
- Parental responsibility, that is, who has responsibility for the day to day decision making relating to the children and more long-term decision making such as schooling, health and religion;
- Time with each parent during regular weeks, school holidays, Christmas time and birthdays and even tailored clauses in relation to your child’s specific needs;
- Communication with each parent;
- The maintenance of a child;
- The process that may be used if there is a dispute in relation to parenting of the children after the order has been made.
If you and your ex-partner are amicable it may be very beneficial for you to discuss the best avenue for you to reach an agreement for parenting arrangements with your lawyer. There is no strict time limit in order to apply for orders in relation to parenting, however it is often more affordable and time savvy to apply for both parenting and property orders at the same time. Your lawyer should be able to provide you with an estimate of costs for both applications, or just one of the applications, prior to doing the work for you.
There are a variety of orders that can be applied for once you have separated, and it can be hard to determine the difference between a divorce, a property order, consent orders, children’s orders and child custody. The best course of action once you have separated is to immediately book with a lawyer, who will be able to inform you of your rights, assist you in preserving your position, and give you frank advice about your next steps to assist you in building your future after separation. It is important to do so whilst you are within the time limits discussed above, so the sooner the better to avoid future heartache.