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Division of Assets in Divorce

Date Added: November 14, 2011 12:12:56 AM
Author: Armstrong Legal
Category: Legal Services

The division of assets in Australian family law may be achieved by agreement reached between the parties or through the four step process of property settlement.

Agreement

It is always preferable for separating parties to attempt to reach an agreement concerning the division of their assets. Both parties must attempt to reach an agreement away from court before filing an application for property orders. ‘Pre action procedures’ must be complied with, except in situations involving urgency, family violence, refusal to negotiate or other exceptional circumstances. The final agreement between the parties may be formalised through the use of consent orders or by way of binding financial agreement.

Consent Orders

Consent orders are written agreements between parties to a former marriage or de facto relationship which are formalised by the court. Consent orders are legally binding and may encompass: the transfer or sale of property, the splitting of superannuation or spousal maintenance.

Binding Financial Agreements

A financial agreement is a written agreement between parties that satisfies the requirements laid out in Part VIIIA (marriages) or VIIIAB de facto relationships) of the Family Law Act 1975 (Cth).

Financial agreements may encompass how property, financial resources, superannuation or debts are to be divided after the breakdown of a relationship. Financial agreements may include arrangements for spousal maintenance and other matters.

There is a requirement that both parties receive independent legal advice before signing the agreement. Importantly, the Full Court of the Family Court has held that total compliance with the legislative requirements for financial agreements will be needed for an agreement to be legally enforceable. This decision has since been ameliorated by the Federal Justice System Amendment (Efficiency Measures) Act (No 1) 2009 – where a court may now take into consideration whether the requirement of strict compliance would lead to a result that was neither just nor equitable for the parties. A financial agreement may not be entered into subject to ‘illegitimate pressure’ (see: Blackmore & Webber [2009] FMCAfam 154) and unlike consent orders, financial agreements are not stored upon a central register.

Division of assets through property settlement

An application for property settlement orders must be made with the Family Court or Federal Magistrates Court within 12 months of a divorce becoming final.

There is a four step process for property settlement that takes place in Australian family law.

The first step involves the creation of a net asset pool between the parties. The net asset pool includes all assets or liabilities acquired before or during the course of the marriage, as well as after separation. The Court will also have regard to other financial resources over which a party has influence, control or prospective entitlements.

The second step sees the court assess the contributions made by both parties to the former marriage or de facto relationship. These include both financial and non-financial contributions. Section 79(4) of the Family Law Act also includes consideration of any contribution made by a party to the welfare of the family in the capacity of homemaker, parent or otherwise.

The third step requires the court to consider factors relevant to the future needs of the parties and to make an appropriate adjustment. Section 75(2) of the Family Law Act lists matters to be taken into consideration, which include: the age and health of the parties, their mental and physical capacity to obtain future employment, their future responsibilities to care for any children or other people (etc.)

Finally, the court will consider whether the proposed property settlement is 'just and equitable'.

Based in Sydney and Canberra, our team of fourteen family law solicitors provides advice to clients throughout New South Wales, the ACT and overseas.