Going through a family law property settlement?
Here are answers to some of the questions we are often asked
12 months after your divorce, or 2 years after you separate if you were in a de facto relationship.
There is no waiting time after you separate, before you can start a family law property settlement. If you reach agreement quickly, you can finalise it either using an Application for Consent Orders, or a Binding Financial Agreement.
It is only once you are divorced (if you were married) or have been separated for a year (if you were not married) that time becomes important.
Once you are divorced or have been separated for a year, you only have 12 months from that date, to finalise your settlement.
If you have not reached agreement and the 12 months is approaching, then you need to apply to court. If you don’t you can forever lose your right to make a claim for a family law property settlement or spousal maintenance.
If you are concerned that your time limit to start a family law property settlement has passed, contact us urgently. We can give you advice about whether or not you can apply to proceed after the time limit.
If your time limit is approaching (12 months from divorce or 2 years after separation if not married) then we recommend you contact us urgently to ensure your time limit does not expire.
If you were in a de facto relationship, even if you agree, you cannot lodge an Application for Consent Orders after the limitation date expires. You will instead have to apply to Court – which is expensive! Don’t leave it too late.
Application for Consent Orders
The usual way to finalise a family law property settlement is by using an Application for Consent Orders and lodging it in the Family Court. The Family Court provides a DIY kit and you can lodge it all without a lawyer, if you choose.
However, the DIY kit only assists with half of the process. You still need the Orders drafted to go with the Application – and that is the tricky bit!
We encourage you to complete as much of the Application yourself. This will save you money on legal fees.
We then draft the Orders to give effect to your agreement and check the Application.
The other party can choose whether or not to get their own legal advice.
Once everyone has signed both documents, they are lodged with the Court.
Once the Application for Consent Orders is filed with the Court, what happens?
A Family Court Registrar will read the Application and Orders and decide if they are ‘just and equitable’.
They will also check if the Orders match what is in the Application and do what is needed. If they don’t pass the test, they will be sent back to you. This does not usually happen if the documents have been prepared by a lawyer.
We often have people contact us to fix up their documents where they have filed them and the Family Court has rejected them.
It can take a few days, or weeks for the Orders to come back from the Court.
Binding Financial Agreement
A Binding Financial Agreement is an alternative to an Application for Consent Orders to finalise a family law property settlement.
Some people, incorrectly, believe that it is a cheaper option to Consent Orders. This is simply not the case.
A properly drafted Binding Financial Agreement will cost more than an Application for Consent Orders. It requires both parties to have comprehensive, independent legal advice. So, if you use a Binding Financial Agreement, you both have to have lawyers. If you use an Application for Consent Orders, you choose whether or not you use a lawyer.
Why would I ever use a Binding Financial Agreement to finalise a family law property settlement?!!
You might have agreed to a settlement that a Registrar of the Court might not approve. For example, we have clients who have agreed to keep property in joint names for an extended period or to run a business together. The Family Law Act requires the Court to end the financial relationship of the parties, so it would be hard to get that deal past the Court.
Another reason is where you want to make provision for spousal maintenance, or make sure no-one can make a claim. If we put spousal maintenance into a Family Court Order, it can be varied by the Court down the track. A Binding Financial Agreement can ensure this does not happen.
So which should I use – a Consent Order or a Binding Financial Agreement?
If you have reached agreement, contact us to talk about which documents will be best for you to finalise your family law property settlement.
We offer fixed fees for both Applications for Consent Orders and Binding Financial Agreements.
There is no mathematical formula.
No starting point of 50/50.
The Family Court and Federal Circuit Court both apply a process set out in the Family Law Act and interpreted by the Full Court since 1975.
Step One: Identifying and valuing the property pool
The property pool that will be divided will include all assets, debts and superannuation owned (or partially owned) by either spouse, regardless of when it was bought or the debt incurred.
That means all assets prior to the relationship and all assets after separation.
Property is valued at the date it is being divided, not at the date of separation.
Step Two: Assess the contributions to the property pool
-owning property before the relationship commenced
-receiving an inheritance
-family members loaning money or assisting to improve the value of the property
Generally, an analysis of the exact amounts earned by each person is not undertaken. A broad approach is taken.
Importantly, a person’s contributions as a homemaker and parent are given as much weight as the main income earner’s financial contributions.
At this step, a range of percentage entitlement is estimated. In longer marriages this is often equal because of the length of the relationship and how people have changed their lives and made decisions as a result of the relationship. However, that is not always the case and the court has a discretion. Different judges (and lawyers giving advice) will place different weight on different contributions.
Step Three – Factors warranting an adjustment
There are factors which can result in an adjustment to the percentage estimated at the end of Step Two. They are known as the ‘section 75(2) factors’ (referring to the section of the Family Law Act in which they appear).
Not all factors will be present in every case and some may not have any at all. They include:
the age and health of each spouse
Whether one spouse has significantly more care of the children
The income of each spouse
The earning capacity of each spouse and the impact of the marriage on each spouse’s earning capacity (i.e.: increase or decrease)
A percentage adjustment may be made at this step. The size of the adjustment is relative to the size of the property pool (that is, you can expect a smaller adjustment in a larger property pool because the dollar value of the adjustment is higher).
Step Four – Justice and equity
This step involves deciding how to divide up the assets based on the percentage result. It’s not a case of ‘sell everything and split the proceeds’ but looking at the realities of life by allocating assets in a certain way.
It is important to remember that there are no guarantees going to court. Ever. No family lawyer, regardless of their experience, can tell you with absolute certainty what your result will be.
Different judges place different emphasis on different aspects of a case. Three judges deciding the same case could come up with three different decisions.
That’s why so few people actually proceed to a final trial and resolve their matter via dispute resolution.
There are many misconceptions around maintenance.
The first is confusion between child maintenance (correctly referred to as child support) and spousal maintenance.
Child Support is administered by the Department of Human Services (Child Support Agency) and only in a very limited range of circumstances will it be deal with by the Family Law Courts.
We find our clients benefit greatly by working with a Child Support advocate to navigate the complex child support system. If you or one of your clients has a child support issue (whether as payer or payee) contact us to discuss whether or not a referral to a Child Support Advocate would assist.
Spousal maintenance orders can be made by the Family Law Courts if certain criteria are satisfied. The legislation is expressed as follows:
s. 72 (1) A party to a marriage is liable to maintain the other party, to the extent that the first-mentioned party is reasonably able to do so, if, and only if, that other party is unable to support herself or himself adequately whether:
(a) by reason of having the care and control of a child of the marriage who has not attained the age of 18 years;
(b) by reason of age or physical or mental incapacity for appropriate gainful employment; or
(c) for any other adequate reason;
having regard to any relevant matter referred to in subsection 75(2).
The Courts have made findings that a person can be expected to exercise their earning capacity before turning to their former spouse for maintenance. In one case, a wife who preferred to pursue a career as a professional artist was unsuccessful – the judge was of the view that she needed to obtain paid employment. Parents of school aged children have been required to take up employment – utilising before and after school care programs if necessary.
As such, the obligation for one spouse to maintain the other is not absolute – even if the spouse seeking support has been a fulltime homemaker and/or parent during the marriage.
The making of an order is not the end of the story. Orders can be discharged or varied – including retrospectively.
Death and re-marriage bring an order for spousal maintenance to an end.
If you are a recipient of ongoing spousal maintenance, you might consider whether you need to have insurance in place in the event of the death of the payer.
If a recipient of spousal maintenance remarries, they are obliged under the Family Law Act to inform the maintenance payer.
There is no automatic cessation of spousal maintenance on entry into a de facto relationship. For spousal maintenance recipients, there can be disincentive to marry and lose maintenance payments. This sticks in the craw of many maintenance payers who see their former spouse living in a marriage like relationship, yet they continue to pay.
It is therefore important that you are aware that a de facto relationship in itself does not automatically end spousal maintenance, it is an avenue to cease payments.
Similarly, if a maintenance recipient improves their financial position, this is another avenue.
How can a Spousal Maintenance order be changed?
A court can discharge an order if there is any just cause for so doing. Circumstances which have been found to be ‘just cause’ include the recipient of maintenance no longer requiring the maintenance for their support (e.g.: an increase in income such that they no longer have a shortfall, if the maintenance was not paid).
Therefore, even if a spouse was unable to work or self-support at the time the order was made, that can be re-evaluated in the future.
The court can vary an order (including retrospectively) in the following circumstances:
(a) that, since the order was made or last varied:
(i) the circumstances of a person for whose benefit the order was made have so changed (including the person entering into a stable and continuing de facto relationship);
(ii) the circumstances of the person liable to make payments under the order have so changed; or
(iii) in the case of an order that operates in favour of, or is binding on, a legal personal representative–the circumstances of the estate are such;
as to justify its so doing;
(b) that, since the order was made, or last varied, the cost of living has changed to such an extent as to justify its so doing;
(ba) in a case where the order was made by consent–that the amount ordered to be paid is not proper or adequate;
(c) that material facts were withheld from the court that made the order or from a court that varied the order or material evidence previously given before such a court was false.
So variations could be made for the following reasons:
– The recipient of maintenance is in a stable and continuing de facto relationship (this gets around the non-marriage to keep the maintenance);
– The payer of maintenance has had a change of circumstances (e.g: decrease in income, ill health, ill health of a new partner);
– A significant change in the cost of living since the making of the Order (reference is made to the CPI)
– If the order was made by consent, the amount agreed to was too high or too low
– False evidence
If you are a liable party to a spousal maintenance order and believe any of the above circumstances may apply, contact us for advice about your options to vary or discharge the order. We will always try to do this without the need to go to court.