How are Property and Finances Divided after Separation?

To see how property is divided we need to first look at the Legislation. Pursuant to the Family Law Act 1975 Section 79 the Family Court may make such orders as it considers appropriate and only if it is satisfied in all the circumstances that it is just and equitable to make those orders. 

So what does the Family Law Act 1975 say is Appropriate, Just, and Equitable in the circumstances? There is a list of factors the Court shall take into account when making property settlement orders pursuant to the Family Law Act 1975 Section 79 (4).

The Global Asset Pool 

Although the starting point is sometimes a fifty / fifty split, generally property is not divided fifty / fifty between people who have split from their partner. Prior to working out the split, you first, however, need to work out what is going to be split. The belongings, assets, and debt of both partners are combined into what is often referred to as a Global Asset Pool. 

Examples of real and personal property that is subject to a division between ex-partners include but is not limited to: 

  • house and land; 
  • cars, motorcycles, and other personal vehicles;
  • valuable collector items (i.e artworks); 
  • household goods; 
  • bank accounts; 
  • businesses; and 
  • superannuation in certain circumstances. 

What does the Family Court take into consideration? What are the ‘factors’?

In financial and property settlements, the division should be appropriate, just, and equitable for all parties. Accordingly, the Family Court will consider the following:

  1. The Global Asset Pool. Value of property, assets, or debts owned individually, jointly, and/or property owned with a third party as part of the combined property owned by the partners wishing to separate. 
  1. Section 79(4) of the Family Law Act 1975. Financial and non-financial contributions made before, during, or after the relationship has ended for the sake of family welfare, children’s upkeep, or maintaining the household. Sometimes referred to as ‘section 79 factors’
  1. Section 75(2) of the Family Law Act 1975. The future needs of each partner including their age, their capacity to work, their state of health, their financial capacity which may attract spousal maintenance if one partner depends on the other, and children’s maintenance. Sometimes referred to as ‘section 75 factors’

Does there have to be a Property Division?

No there does not have to be a property settlement. Once one person makes an application for a property division then the Family Courts decide if there should be a property settlement. This means that the Family Court may decide that there should not be a property division, and may reject a property settlement application. This may be because the relationship was very short, the ex-partners kept their finances separate if the overall global asset pool is small and there is not much to be divided between the partners, and/or a long time has passed since separation in cases where married couples have separated but nor divorced.

Each partnership is different and courts generally rule that ex-partners contributed equally if they had a long relationship, especially if it is over ten years in length. However, exceptions may be considered by the Family Court if:

a. The relationship was short and you don’t have any children therefore only your direct financial contributions will be considered.

b. One of the people owned substantially more than the other at the start of the relationship. 

c. One of the people made a recent substantial contribution to their relationship with an inheritance, gift from a family member, or a personal injury settlement.

Do I need a lawyer to obtain a property settlement from my ex-partner?

We are a law firm so of course, we will tell you to hire us, silly to ask really. However, if you don’t want to hire us, then at the very least we strongly recommend that you obtain independent legal advice prior to agreeing to anything. This independent legal advice should come from a lawyer who is only representing you and has no connection to any other people involved in the property settlement. 

The Family Court of Western Australia provides for financial and property settlement guidelines for married, and de-facto couples who decide to separate. In these property settlements, we recommend you appoint an independent lawyer to advise and represent you, or at the least obtain independent legal advice.

Which Laws? What is the legal framework around financial separation in Western Australia?

Pursuant to Section 51(xxi) of the Australian Constitution gives the Federal Government of Australia jurisdiction over Marriage. This means that married couples are governed by the commonwealth legislation Family Law Act 1975 (Cth).  If the parties are not married, including De-facto couples, they are governed by the Western Australian legislation being the Family Court Act 1997 (WA) .

These pieces of legislation are designed to work together. In Western Australia, the Family Court of Western Australia was established to be an integrated court enabling it to deal with matters using both pieces of legislation. 

The Family Court of Western Australia deals with divorce, property settlement after separation, spousal maintenance in marriages, and parental arrangements after separation. 

When can the property settlement occur?

Ex-partners can resolve their financial and property issues after separating even though a divorce is not finalized. A Binding Financial Agreement (“BFA”) can be made prior to the relationship, during the relationship, or after the relationship. Using a Binding Financial Agreement the former couple can make a binding property settlement agreement to divide the Global Asset Pool between them. Alternatively, if the former couple wants binding orders of the Family Court they can obtain Family Court Orders by filing a Form 11 for Consent Orders setting out their binding settlement agreement. 

What determines a de-facto relationship?

Pursuant to section 4AA of the Family Law Act 1975 a de facto relationship is when you and your former partner, who may be of the same or opposite sex, had a relationship as a couple living together on a genuine domestic basis. 

Former de-facto partners who want Family Court orders in a property settlement are required to file an affidavit about their relationship to prove it was a de-facto relationship with their application, and this application should be within two years of the end of the relationship. To determine whether a de-facto relationship existed, the following factors are considered: 

a. The length of the relationship, which should have lasted for at least two years. If the relationship was shorter, you will have to prove that significant financial contribution during the period of the relationship and/or there is a child of the relationship. 

b. Did the ex-partners live together. 

c. Did the ex-partners have a sexual aspect to their relationship. 

d. Did they financially rely on each other or have any arrangements for financial support made between them.

e. The ownership, use, or purchase of property including individually owned property. 

f. The degree of mutual commitment to a shared life, and the perception of the relationship as a couple to other third parties like relatives, friends, and/or neighbours.

g. Did they share the responsibility of raising or parenting a child or children?

What if there is an agreement about how to deal with the property? 

If there is an agreement on how to divide the global asset pool, then there is no need to apply for the Family Court seeking Judgement. Further to this, prior to applying to go to Family Court for Judgement you will need to follow the pre-action procedures or make an application for an exemption to the requirement for you to follow the pre-action procedures. These pre-action procedures are designed to encourage a property settlement of the matter without Family Court intervention. It is an attempt to resolve any division of property disputes and encourage the making of genuine offers to resolve the property dispute. 

What do I have to tell my ex-partner?

Disclosing of all relevant documents relating to property is a mandatory duty; see Rule 13.01 Family Law Rules 2004. This means that during this pre-action procedure, as well as during any Family Court action all parties to the dispute have a duty of disclosure

What if an agreement can’t be reached?

Once the pre-action procedures have been complied with or an exemption has been given, then it is open for an application to the Family Court to start an action. Either partner can make an application to the Family Court to start an action to obtain a judgment. To make an application for property orders from the Family Court by completing and filing an Initiating Application called a Form 1, a Financial Statement called a Form 13, and a supporting affidavit supporting the Initiating Application Form 1. 

These documents will form the basis of the ongoing Family Court action. This means that they should be prepared very carefully. We highly recommend that you obtain independent legal advice during the preparation of these documents. Naturally, our office can help you prepare these documents. Give us a call if you need assistance with these matters.

After these documents have been prepared, sworn, and filed they will need to be served on the other party. This should be done by a Process Server, who will then provide affidavit evidence for the Court that the documents have been served. 

Is there a time limit for filing a property settlement application in the Family Court. 

As with any other court application, there is a time limit for when you can file for a property settlement application. If you were married and have obtained a divorce then you have one year from the date of your divorce to file in the Family Court. 

It is important to note that Family Court orders formally end the financial relationship between you and your ex-partner so that neither of you can make a claim to the other’s assets in the future. Further in cases of transferring real property under family court orders, or Binding Financial Agreements then nominal stamp duty can apply. Thus, saving money on transferring the real property.

If you’re ending a de facto relationship, you have two years from the date of your separation to finalise property settlement by consent or apply to start proceedings in the Family Court. 

If for some reason, you apply outside of the time allowed then you need to request for leave of the Family Court giving a good and reasonable reason for the late filing. The Family Court will then consider your application and the reasons given accepting or rejecting your application for leave to file late. 

What is the difference between interim orders and final orders?

There are two types of orders that can be applied for and ordered by the Family Court. They are Interim Orders, and Final Orders. 

When Family Court proceedings are going on, you may need interim or temporary order which may be to:

a. Allow one of you to live in the former matrimonial home for the duration of the Family Court Action or until a final agreement can be reached.

b. Prevent one or both of you from selling or dealing with property to the detriment of the other party. 

c. Require one of you to pay money to the other on a one-off or ongoing basis for the duration of the Family Court Action or until a final agreement can be reached. 

Additionally, there are final orders which are made after a trial, or after you and your partner have reached a final agreement about how the Global Asset Pool will be divided. This agreement between the parties is often formalised by way of a Form 11 Consent Orders. Some of the orders may be to:

a. Pay a lump sum, either in one amount or by installments.

b. Transfer real Property from one ex-partner to the other.

Conclusion

While an ex-partner cannot take half of all your belongings in all cases, long-term relationships may attract such a result. As you can see from what we have discussed above a lot of variables affect the outcome and division of the Global Asset Pool. The Family Court in making order regarding property will take into account the specific circumstances of each relationship and each of the parties to that relationship.

Benefits of speaking to a Family Lawyer sooner

A family dissolution is a very emotional situation and can be confronting talking to your former partner about these issues. Hiring a professional lawyer can help you get through the process by helping to avoid direct confrontation. To that end, you should also speak to our Family Law lawyers about negotiating a possible outcome and drafting a written agreement hopefully avoiding the costs associated with going to Family Court.

Please note that nothing here should be taken as legal advice or a substitute for speaking to a lawyer from our office directly. If you have any questions, you can reach one of us on 08 63238613.

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