The division of assets, including superannuation, is something that most couples negotiate after separation. Sometimes this negotiation is amicable, and parties are able to reach an agreement between themselves, and sometimes parties require the assistance of a family lawyer.
Regardless of how you reach an agreement, it is important that you formalise your property settlement. There are substantial risks associated with a failure to formalise a property settlement by way of Consent Orders or a Financial Agreement. If you do not enter into one of these documents, and simply divide up your assets and liabilities, you are completing an informal property settlement.
An informal property settlement carries many risks and is not legally binding or enforceable upon you or your former spouse. This means that:
Should a party fail to do something that was agreed, for example, make a cash payment to you or sell a property, there is no way of compelling that party to act in accordance with the agreement; and
You may be open to a later claim from your former spouse, and the claim may be bigger than that which you are exposed to at the time of separation. This is because the Court considers the assets, liabilities and superannuation at the date it makes a decision; therefore, any growth in your assets (including superannuation) and any new assets that you have acquired between separation and the later claim will likely be included in the asset pool available for division.
There are time limits that apply to point (2) above. Parties to a marriage have 12 months to make a claim upon their former spouse following a divorce order taking effect, and parties to a de facto relationship have 2 years from the date of separation to make a claim. Claims brought after this time will need to be considered by the Court on a case-by-case basis.
There are two ways to formalise your property settlement:
By way of Consent Orders - this is a relatively straightforward process and neither party is required to receive legal advice. In saying this, it is beneficial to engage a family lawyer to advise you on the property settlement that you have reached, whether it is just and equitable and within the range of outcomes that could be expected from the Court, and to assist you with the preparation of the Consent Orders and accompanying application. A failure to complete the documents correctly gives rise to a risk of a requisition being issued by the Court, or the Consent Orders being incapable of being implemented; and
By way of Financial Agreement – this document is often more complex and requires both parties to have received independent legal advice prior to the document being entered into. Unlike Consent Orders, a Financial Agreement is not subject to the Court’s approval. It is often used when parties are entering into a property settlement that may not be approved by the Court.
Regardless of which document you choose, formalising your property settlement will give you peace of mind that no further claim can be brought against you by your former spouse except in very limited circumstances. The documents will also allow you to “split” superannuation and may provide stamp duty relief to a party who retains real property or assets such as motor vehicles.
No matter where your property settlement is up to, you should seek specialist advice from a family law solicitor. As family law solicitors, we at Robinson + McGuinness will be able to advise you in relation to your rights and entitlements and assist you to finalise your property settlement in an efficient and cost-effective way.
If you would like to discuss your options and how we can assist you, contact us today at (02) 6225 7040 or by email at info@rmfamilylaw.com.au or get started now online.
Author: Peta Sutton