Property settlement, step by step

The four parts below explain how a property settlement is assessed. These principles inform negotiations as well as decisions made by a court, and apply to married couples and eligible de facto couples.

Understanding them can help you assess a proposal and identify what needs further advice. They do not produce a fixed percentage or mean that your settlement should match someone else’s.

1. Identify and value the property

The starting point is what you and your former partner own and owe, individually and together. This can include:

• Your home and any other real estate.

• Savings, investments, shares and vehicles.

• Business interests and interests in trusts.

• Superannuation.

• Mortgages, loans, credit cards and other debts.

Property does not fall outside the assessment simply because it is held in one person’s name. You should also identify property acquired before the relationship and any gifts or inheritances. How those assets were acquired matters when contributions are considered. More about property included in a settlement.

The values generally need to be current when the settlement is reached, rather than fixed at the date of separation. A home’s value, a mortgage balance or a superannuation interest may have changed in the meantime. Where a significant value is disputed, a valuation may be needed.

Both people have an ongoing duty to provide full and frank financial information. This involves exchanging relevant records, not simply accepting each other’s estimates. The duty applies while trying to resolve the matter before court proceedings and continues as circumstances change.

If your former partner managed the finances, explain what you know and what information is missing. Your lawyer can advise on the records needed and the steps available to obtain them. Only gather documents you can access lawfully and safely. The court’s guidance on financial disclosure.

2. Assess each person’s contributions

Contributions can be made before, during and after the relationship. They include income, savings and property brought into the relationship, as well as inheritances and financial help from family.

They also include work that does not produce an income: caring for children, managing the household, renovating a home or working in a family business without a wage.

For example, one person may have paid the mortgage while the other reduced their paid work to care for children. Comparing their earnings alone would leave out an important part of their contributions.

It is useful to record what each of you owned and owed when the relationship began, significant contributions during the relationship, and the arrangements since separation. Caring for children or meeting mortgage repayments after separation may also be relevant.

3. Consider current and future circumstances

The assessment also considers each person’s position now and their needs after separation. Relevant circumstances include age, health, income, earning capacity, financial resources and responsibility for caring for children, including their housing needs.

A parent caring for young children may have less capacity to work. Someone who spent years outside paid employment may need time or training to return. These circumstances can affect the division, but do not produce an automatic adjustment of a particular amount.

Family violence can be relevant both to contributions and to current and future circumstances. Its economic effect must be considered where relevant. This may include being prevented from working, or ongoing treatment costs arising from the violence.

Tell your lawyer about any family violence, including financial control or abuse, so its relevance to the settlement and the way negotiations are conducted can be considered. More about family violence and property settlements.

4. Consider whether the overall outcome is just and equitable

The court must be satisfied that making property orders is just and equitable in all the circumstances. That is not simply a final check of the arithmetic.

A proposed settlement also needs to be considered in practical terms:

• If one person keeps the home, can they meet the mortgage repayments and fund any payment to the other?

• What money will each person have available for housing and living expenses?

• What needs to be sold or transferred, and how will those steps be carried out?

Superannuation is particularly important here. It can be divided as part of a settlement, but a split does not turn it into cash available for immediate use. The usual rules about accessing superannuation still apply. How superannuation is treated in a property settlement.

Two proposals offering the same percentage can leave someone in quite different positions. A share made up largely of superannuation will not meet immediate housing costs in the same way as available savings. These are matters to work through before agreeing to a proposal.

Reaching and formalising an agreement

You do not need a contested court hearing to settle property matters. Negotiations through lawyers or mediation may help resolve disagreements about values, contributions or the proposed division.

Before starting court proceedings, there are generally requirements to exchange information and make a genuine effort to resolve the dispute. Exceptions apply, including in urgent cases and cases involving family violence. Your lawyer can advise on the appropriate approach.

Once an agreement is reached, it should be given legal effect. An informal arrangement does not provide the same protection against a later property claim. The two main options are:

• Consent orders: you jointly ask the court to make orders reflecting your agreement. The court considers whether the proposed property division is just and equitable. An application can usually be dealt with without attending a hearing.

• A binding financial agreement: a private agreement that must meet legal requirements, including each person receiving independent legal advice before signing. It does not require court approval.

Your lawyer can explain which is appropriate and what must happen to complete the settlement, including any transfers, payments or superannuation arrangements. More about formalising an agreement and financial agreements.

Some property transfers following a relationship breakdown may qualify for an exemption from transfer duty, often called stamp duty. The exemption is not automatic: eligibility and supporting documents matter. Get advice about these requirements before transferring property.

Time limits apply

You do not need to wait for a divorce before dealing with property.

The usual deadlines for applying to the court for property settlement orders are:

• Married couples: within 12 months of the divorce becoming final.

• De facto couples: within two years of separation.

These are deadlines for starting proceedings, not a requirement that the whole settlement be completed by that date. Continuing negotiations does not, by itself, extend the time limit.

If the deadline has passed, you generally need the court’s permission to apply, and permission is not automatic. Seek advice promptly if a deadline is approaching or you are unsure which date applies. The court’s guidance on time limits.

Getting advice about your settlement

You can seek advice before making a proposal, while negotiations are underway or after receiving an offer. You do not need to have all the figures before a first appointment.

PWB Lawyers advises on property settlements, negotiates agreements and represents clients where court proceedings are needed. We can explain how these principles apply to your circumstances and what further information is needed to assess your options.

Contact PWB Lawyers to enquire about an appointment. Our first-appointment guide explains what is useful to bring.