Ending a relationship can be extremely challenging both emotionally & financially. Reaching a property settlement agreement with your ex partner can be a difficult. Many separating couples find the best outcome is to negotiate a property settlement agreement with an ex partner & then to have the Court issue consent orders. Many separating couples have made the mistake of not getting consent orders from the Court. This may leave you vulnerable if one party does not abide by the property settlement agreement, as you may be unable to enforce it.
If you are able to negotiate a property settlement agreement with your ex partner directly is it important that you then seek legal advice from an Accredited Family Lawyer regarding consent orders and next steps.
Separating couples can apply to either the Family Court or Federal Circuit Court for consent orders to be made on their behalf. Keep in mind that there is a time limit of 12 months for divorcing couples & a time limit of 2 years (from the date of the end of the relationship) for separating de facto couples to make an application for property settlement.
De Facto Relationship Entitlements:
The most common questions people will have about de facto entitlements on separation is:
- What is the potential financial outcome of my property settlement;
- What is my exposure, how much will I have to pay;
- What are some strategies that will enable me to maximize my property settlement;
- I want to pay my ex partner minimal de facto relationship entitlements, how can I achieve this.
Once separation occurs it is important to turn your attention to any de facto entitlements on separation that may exist and start the process of trying to reach a separation agreement. A property settlement includes assets, liabilities and financial resources. All of these things will form part of your separation agreement.
When determining de facto entitlements on separation you will hear the term financial resources a lot. Financial resources can include things such as; superannuation, savings, interest earned, shares, businesses, property and any other financial dealing you have separately or together.
Try to think of anything of value that either you or your ex partner owns. This relationship property forms a pool of assets and it what is divided to reach a property settlement agreement. Your relationship asset pool may include things like:
- Any assets owned either jointly or separately;
- Any property owned in joint or separate names including any private agreements you may have negotiated regarding property in one name;
- Any superannuation in one or both names;
- All business interests of both parties;
- Any interests in other companies or businesses;
- Family trusts, Trust interests;
- Any funds or Interests over which one party to the relationship has influence or control but are not in their name;
- All assets in one or both names that were owned before the relationship started;
- All assets and property purchased during the relationship;
- Any assets purchased by one arty after separation.
All assets ands resources need to be accounted for & divided in the separation agreement however the liabilities of both parties must also be taken in account to determine all de facto entitlements on separation. Your relationship liabilities may include:
- All personal debt
- Any mortgages
- Tax debt
- Stamp duty
- Line of credit
Keep in mind that the Court will consider all liabilities irrespective of if they are in one parties name only or joint names.
What are my de facto entitlements on separation exposure?
There is no one rule of thumb for how the Courts divide property or reach a separation agreement. There is no automatic 50/50 split & just because a friend of a friend had this result does not mean you will too. Each case is considered on its own merits and will have its own outcome.
The Courts will frame their orders as a percentage of the asset pool after all liabilities have been considered. This is why you hear people who have been through the process talk in terms of a separation agreement being reached as a 30/70, 30% to the husband and 70% to the wife. Note even though you were not married you will be referred to as husband & wife in Court.
Say the net asset pool of the relationship was $1,000,000; the Court is ordering the wife receives 70% of that asset pool being $700,000 and the husband to receive 30% being $300,000.
The Court is state who is to keep which assets, detail any assets to be sold and state any cash adjustments to achieve the percentage split
Example of the financial aspect of a Property Settlement Agreement:
Say the net property pool is $1,590,000 and comprises assets, financial resources and liabilities of the relationship:
- Their home is worth $1,000,000 with a joint mortgage of $400,000 so net $600,000
- They have an investment property valued at $600,00 with a joint mortgage of $200,000 so net $400,000
- Mercedes 4WD vehicle worth 40,000
- Mercedes e250 vehicle worth 50,000
- Contents of the family home valued at $50,000
- Superannuation of husband $400,000
- Superannuation of wife $200,00
This allows for a net asset pool of $1,740,000
Supposing the Court divides the net asset pool in the wife’s favour based on a 70%, 30% split. This means the wife will receive her 70% of the relationship asset pool, which amounts to $1,218,000:
- The matrimonial home worth $1,000,000 with the mortgage of $400,000 to be sold. Proceeds totaling $600,000 to be paid to the wife
- Contents matrimonial home of $50,000
- Mercedes e250 vehicle worth 50,000
- Wife’s Superannuation of $200,00;
- Investment property to be sold with proceeds of the sale totaling $318,000 to be paid to the wife
Keep in mind that the makeup of every property adjustment is different. Much will depend on the asset pool, contributions made by both parties, if there are children of the relationship & the future earning capacity of each party. Every matter is different and this is why estimating any potential property adjustment is difficult to do.
Remember, the information contained on the site does not constitute legal advice. If you think you need legal advice you should contact an Accredited Family Law Specialist.
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