The perils of delaying your family law property settlement
- April 21, 2018
- Jennifer Hetherington
- 3 Comments
As a family lawyer it’s not uncommon for me to encounter people who wrongly believe that they cannot do their family law property settlement until they have finalised their divorce.
Or they just haven’t got around to it. Here are important reasons why it is important to both finalise your family law property settlement as quickly as possible after separation and get divorced as soon as your 12 month time limit expires.
Reasons not to delay your family law property settlement
Until you are legally divorced, your spouse remains your spouse.
That means more than simply not being able to remarry. The main impact is what can happen on your death. If you don’t have a Will, your estranged spouse may still be considered to be your spouse for the purposes of succession law.
That means that they may receive an entitlement on your death.
If you don’t have a Will and want to make sure that your ex doesn’t get treated as if you were still playing happy families, then you need to get your family law property settlement done ASAP. Get started now.
But I have a will
Great! That’s important – and even more important to update it after separation. But, even if you have a Will, until you are divorced, your former spouse may be able to make a claim under family provision legislation, as if they were still your spouse. Again, this basically means they can contest your will and may be treated by the court as if you were still a happy couple at the date of your death.
You might not think that you’ll care what happens after you die, but your children might! If you haven’t updated your will since separation or divorce, contact us to discuss how to do that.
Why is a divorce important? I’m not planning to remarry
Once you are formally divorced, even if you don’t change your will, in some states and territories in Australia, any gift to your former spouse in your Will, will be automatically invalid. So, if you just haven’t got around to it, your divorce can protect your children’s inheritance.
The general issue of post-divorce property settlement is in focus after the Family Court heard a case involving a couple who were together for 17 years and had two children. The husband inherited a $715,000 property from his late brother’s estate three years after separation. A judge excluded the property from the asset pool and the woman appealed, and won.
The moral of this story is:
- get your divorce once the 12 month time limit has expired; and
- make sure you’ve got a valid Will that you update once you’ve separated
Contact us if you need assistance to get divorced.
But don’t I have to wait until I am divorced to do a family law property settlement?
Some wrongly believe that they cannot do their property settlement until they have finalised their divorce. You can actually do it as soon as you like. Time limits apply after you are divorced.
Contrary to some incorrect beliefs floating around the community/internet/social media, your assets are not divided at the date of separation. They are divided at the date that orders are made.
That means, if you manage to negotiate a settlement with your ex, then all of the assets would have to be disclosed in the documents to legally formalise your agreement are the assets that you have at the date that that consent orders are being signed.
So, if you win lotto, that can be included. If you buy another property, that can be included.
If you can’t reach a resolution and your matter goes to court, you could be waiting two to three years for a trial date, but the judge will still use the values of your assets and liabilities at the date that the matter is being heard in court.
Here are some examples of where that can become a particular problem:
Increase in value of an asset
I had a client who desperately wished to retain their former matrimonial home for herself and her children. She had been delaying a settlement in the hope that she would be able to convince the husband to give her a greater proportion of the property pool so that she could retain the house.
Unfortunately, whilst that delay was occurring, the housing market improved and therefore the value of the property increased. Other assets in the property pool did not increase at the same proportion, so every incremental increase of the value of the house made her desire to retain it less achievable.
If you’re in a rising property market and you want to retain a property, it makes sense to try and get that property settlement done as quickly as possible, otherwise it may make it impossible to keep that house.
- Any assets that you acquire after separation can be included in the property pool. If these increase in value, then the increased value is what goes in, not what you paid for it.
- Any assets that you acquire after separation can be included in the property pool. This includes lottery wins, gifts, and inheritances.
In a recent case decided by the Full Court of the Family Court of Australia, the court said that a property the husband had inherited three years after separation was to be included in the property pool after the trial judge had excluded it.
The Court made it very clear in the judgement that all property goes in and nothing is excluded or immune from the property pool. The question of what contributions have been made to that property will be considered, but if it is the only significant piece of property in a property pool then it can have far-reaching ramifications.
I am likely to get a big inheritance in the future
Prospective inheritances (that is, where the person who has made the will still has capacity to change that will and is alive) are not taken into account by the court.
If you have separated and think you might receive an inheritance in the next year or so, particularly if that might be a significant inheritance, then it would be a definite advantage to you to get your property settlement done quickly, otherwise the inheritance can form part of the property pool.
So in summary
– get your divorce done once you’ve been separated for 12 months
– whether you were married or de facto, get the ball rolling on your property settlement as soon as you can after separation.
But what if we can’t agree and are stuck with the delays in the Family Court?
There can be delays in the Court process, so if we can’t agree things between ourselves does that mean we have a two to three year wait ahead of us? All those values are going to be out of date by then!
Not necessarily. There are numerous avenues available to you to avoid going to court which I highly recommend in preference to going to Court.
How to finalise a family law property settlement or divorce without court
Collaborative law offers an opportunity for you and your former spouse to negotiate an agreement respectfully, away from the courts, taking into account the interests and needs of all family members including your children.
You both sign a contract and commit to not going to court. The Collaborative process can resolve your family law property settlement in as little as three months and costs significantly less than taking your family law matter to court.
It is also the process most likely to result in you and your former partner having an amicable co-parenting relationship moving forward.
Mediation is compulsory in family law parenting matters and is virtually compulsory in property matters. Even if you do file in court, you will inevitably be required to do mediation by your judge after your first court date.
It therefore makes sense to mediate before you decide to file court proceedings, as it has an incredibly good success rate. I am a mediator and firmly believe that for those matters where Collaborative law is not appropriate, mediation offers the next best process. There are options for fixed fee mediation which can give you certainty about your costs.
Depending on what needs to be undertaken in terms of any valuations and disclosure of documents, a mediation can be arranged and held within about a three month period.
Arbitration is essentially “private judging”. I liken it to choosing to use a private hospital with a specialist of your choice, rather than being on the waiting list for a public hospital.
With arbitration you get to choose an experienced family lawyer and accredited arbitrator at a time of your choosing. You avoid the two to three year delays in the Federal Circuit Court and Family Court of Australia, where you have no choice over which judge you will get.
You are also able to design your own arbitration process and agree to conduct the matter in a way that you and the other party agree, flexibility which is not available if you take your family law property settlement to court.
All three of these processes can have you concluding your matter within a period of about three months if everybody is motivated to move things along.
This results in significantly decreased legal fees over going through court, but also means that you can draw a line in the sand and move on and not face the issues that have been discussed above.
Any family lawyer who is not discussing these three options with you as being the best ways to conclude your family law property settlement instead of going to court, is perhaps not the person that you need in your corner. Choose a collaborator, not a gladiator
So how do I finalise my family law property settlement or get more information?
For more information about family law property settlement check out our frequently asked questions, obtain confidential, personalised answers about your situation within minutes, or contact us for an appointment with a member of our experienced Brisbane family law team.