Property Settlement
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“Am I entitled to half?”
Following the breakdown of a marriage or a de facto relationship, the parties will inevitably need to sort out how to divide their assets and debts. A common question that we often get asked is, “am I entitled to half?” The simple answer is, there is no presumption of “fifty-fifty”, the more complicated answer is, that will depend on a variety of factors and the parties’ individual circumstances. The Family Law Act 1975 outlines the matters relating to property settlements for married and de facto couples.
If the parties can reach agreement
Parties can agree between themselves how to divide their property. Once the parties have reached agreement, they should ensure that the agreement is documented into a legally binding agreement.
Global Approach v Asset by Asset Approach
There are two different approaches that the Court can take when assessing the property pool. The first, and most common approach is the “global approach”. This involves looking at the property pool as a whole and assessing the contributions that each party has made.
The “asset by asset” approach involves assessing the parties’ contributions with respect to individual assets. The “asset by asset” approach is rarely used as it usually increases the complexity of the case. There are, however, examples of when a Court will consider utilising the “asset by asset” approach for some or all assets, including:
- Where a party has received an inheritance later in the relationship;
- Where the relationship is very short, and the parties have kept their assets separate; and
- Where there is a significant amount of superannuation.
Valuing Superannuation
If you are thinking about making an agreement about superannuation, you will need information about the superannuation interest. To get the information a Form 6 Declaration, Superannuation Information Request Form and the Superannuation Information Form must be sent to the Trustee of the Superannuation Fund (Trustee). You can get these forms using the Family Court’s Superannuation Information Kit. The fund may also charge a fee.
Depending on what type of fund you are dealing with, will depend on what type of information you get from the Trustee and whether the fund can be valued or whether you will need an expert valuation. Superannuation can be complex, and you may need legal advice about this.
If the parties are unable to reach agreement
If the parties are unable to reach agreement, either party can file an application to the Federal Circuit Court seeking orders for a property adjustment. The usual approach the Court will take is:
- Firstly, to identify all the property of relationship as at the date of the hearing, and its value. This includes all assets, businesses, trusts, liabilities and superannuation owned by both parties, prior to and after separation;
- The Court will then assess the contributions made by both parties, before, during and after separation. Contributions can include financial and non-financial contributions, any inheritance received by one, or both, of the parties and negative contributions. The weight attributed to an inheritance will depend on a variety of factors;
- The Court will then need to assess the future needs of the parties to determine if there is a need for an adjustment in favour of one party over the other; and
- The Court has discretion when dividing property and will ensure that any adjustment of property is fair and equitable, having regard to the parties’ individual circumstances.
Superannuation
Superannuation is treated as property under the Family Law Act 1975, however it is as a different type of property and will be subject to the relevant superannuation laws. Superannuation splitting will not make the superannuation into a cash asset, and it will remain subject to the applicable superannuation laws.
Procedural Fairness
Whether you and partner reach agreement, or a superannuation split is dealt with by the Court in making financial orders, the Trustee must be advised about the orders you are seeking before any final orders are made, this is known as procedural fairness. The Trustee must be given the opportunity to object to the superannuation splitting order you are seeking, although this rarely happens. If the superannuation order is made, whether by consent or after a hearing, you must provide a sealed copy of the order to the Trustee.
Payment
Payment of any superannuation interest is subject to the relevant superannuation laws. When the superannuation interest becomes payable, the agreed amount under superannuation split will be paid to the non-member and the remainder will be paid to the member.
In some instances, if there is a payment splitting order, the splitting laws may allow for the creation of a new interest for the non-member or may allow a transfer or roll-out of the benefits for the non-member to another superannuation fund. However, in most cases a splitting order does not usually create a new superannuation interest for the non-member.
Time Limits
There are certain time limits that apply for filing applications to the Federal Circuit Court for a property settlement. If you were married, an application for a property settlement must be made within 12 months of your divorce becoming final. If you were in a de facto relationship, an application for a property adjustment must be made within 2 years from the date of separation.
If you do not apply within these time limits, you will need to seek leave of the Court to file your application, outside of time, which is not always granted and is at the discretion of the Court.
Pre-filing Procedures
Before you file an application with the Federal Circuit Court, parties should make a genuine effort to resolve the matters between themselves. If it is not practical, or safe, for the parties to communicate with one another face to face, the parties may be suitable for family dispute resolution or engage a lawyer to assist them with their negotiations.
TWC Lawyers specialises in property settlements, including complex property matters involving corporate entities, trusts and superannuation funds. For specialist property advice from a family law lawyer, contact us on (07) 5522 5777.
Duty of Disclosure
Following separation and during property settlement negotiations, the parties must disclose to each other information about their direct and indirect financial circumstances. Rules 13.04 and 12.02 of the Family Law Rules provide specific rules about full and frank disclosure in financial matters. It requires that the parties disclose to one another all sources of earnings, income, property and other financial resources. This applies whether the property, financial resources and earnings are owned by, or come to, a party directly or go to some other person or beneficiary (for example, the party’s child) or are held in corporate entities.
Also required to be disclosed is information about any disposal of property (whether by sale, transfer, or gift) that was made in the year before the separation or since the final separation and that may affect, defeat or deplete a claim.
The duty to disclose continues throughout the course of a proceeding and up until settlement. If the parties fail to comply with their duty, the Court may take this into account when deciding if a costs order should be made against a person. Further, if final orders are made and one party’s failure to provide full and frank disclosure results in a miscarriage of justice, this may be grounds to apply to the Court to have the final orders set aside.