What Every Couple Should Know Before Negotiating a Property Settlement

Negotiating a property settlement after separation is a discussion of many things, along with agreeing on who keeps the family home. The process includes identifying assets and liabilities, assessing contributions, documenting the agreement accurately and considering future circumstances. The way these factors are assessed can have a direct bearing on the outcome of the settlement and the interests of both parties.

In this regard, we’ll explore the key legal and practical considerations that you should take into account before negotiating a property settlement.

Understand What Forms Part of the Property Pool

Before discussing the distribution of specific assets, both you and your ex-partner should establish a complete picture of your financial position. A property settlement may include assets and liabilities held jointly or individually. The property pool may include the following:

• The family home and other real estate
• Businesses, trusts and insurance interests
• Bank accounts, investments, shares and vehicles
• Superannuation interests.
• Mortgages, loans, credit cards and other debts
• Inheritances or other significant financial interests

Do Not Assume Property Will Be Divided 50:50

A common misconception is that separation results in equal distribution of assets. However, Australian family law does not always prescribe a 50:50 split. The outcome mainly depends on the circumstances of the relationship and the parties. While assessing a property settlement, the legal framework may consider the following aspects:

• Initial and later financial contributions
• Non-financial contributions, such as renovations
• Contributions as a homemaker or parent
• Gifts, inheritances and other indirect contributions
• Current financial circumstances and future needs
• The economic effect of family violence, where relevant

Consider Both Financial and Non-Financial Contributions

Upon the identification of the overall property pool, the next step is to understand how each person has contributed during the relationship. Financial contribution includes:

• Business Profits
• Initial cash or property brought into the union
• Inheritances
• Gifts
• Mortgage Repayments
• Debt
• Property Maintenance
• Superannuation Injections
• Children Expenses

Non-financial contribution includes domestic and parenting efforts made by a partner to the welfare of the family. Similarly, managing the household, maintaining property, renovating a home or supporting a partner’s businesses can also count as non-financial contributions.

Assess Future Financial Needs

Past contributions are only part of the assessment. You should also consider the respective circumstances after separation. Some of the relevant considerations that you should keep in mind are your:

• Age and health
• Income and earning capacity
• Financial resources
• Housing requirements
• Responsibilities for children
• The practical effect of family violence, where applicable

Getting Independent Legal Advice Before Agreeing

Before proceeding with your property settlement, it is important that you have knowledge of how the agreement will impact your legal and financial situation. Even if the negotiations are cooperative, there may be instances wherein the agreement fails to consider certain factors or legal requirements.

This is where property and financial settlement lawyers can assist you in determining if the agreement is reflective of the circumstances and that it has been correctly drafted. Legal guidance can also uncover any issues relating to property transfers, superannuation, taxation, businesses, trusts, and other debt considerations. It is especially important if the financial situation is complicated or when there are disagreements regarding valuation and contributions.

Choose an Appropriate Method to Formalise the Agreement

Once the agreement is reached, you should also consider how to make it legally effective. Depending on the particular circumstances, the following options can be considered:

Consent Order: Agreement approved by the court. In Western Australia, consent order applications are made at the Family Court of Western Australia.

Binding Financial Agreement: A formal agreement governed by specific statutory requirements, including requirements concerning assistance from a lawyer for a separation agreement.

Be Aware of Time Limits

Property settlement rights are subject to statutory time limits. Married couples typically have one year following the completion of divorce proceedings to apply for property orders. De facto couples who meet the requirements may have two years from separation to apply for property orders.

Consider Negotiation and Mediation Before Court

Negotiation and mediation can help you reach an agreement while reducing the costs and time associated with court proceedings. A structured process can also help you focus on evidence, valuations, practical outcomes and your respective legal position.

Conclusion

Property settlement negotiations can shape your financial position well beyond the end of a relationship. This makes it important to approach them with a clear understanding of the legal process. In Perth, the outcome depends on the relationship’s circumstances, the property pool, each party’s contributions, and relevant future considerations.
Where negotiations involve disagreement or complex financial interests, the best divorce lawyers in Perth can assist in assessing the legal position and determining the appropriate path towards a properly documented settlement. This can provide a clearer foundation for resolving financial matters and bringing the property aspects of separation to a formalised settlement.