Property Settlements

5 Common Misconceptions in Property Settlement

When it comes to property settlement there are some common misconceptions about legal rights and the Court process which can be the cause of unwarranted stress and confusion for people going through separation and divorce. Family Lawyer, Virginia Bui dispels five of those common misconceptions

When it comes to property settlement there are some common misconceptions about legal rights and the Court process which can be the cause of unwarranted stress and confusion for people going through separation and divorce.

Family Lawyer, Virginia Bui dispels five of those common misconceptions.


 

1. Divorce and property settlement are the same thing.

Put simply, getting a divorce is simply the process of becoming unmarried.  The sole ground for divorce is Australia is 12 months separation.

Divorce and property settlement are not one and the same.  Separated parties can have a property settlement without getting divorced and parties seeking to divorce do not necessarily have to have a property settlement.

However, once the divorce is granted a party has 12 months to commence proceedings in the Court for property settlement. De facto couples have 24 months from the time of separation to institute Court proceedings.  There are circumstances however, where the Court will allow a party to make an application for property settlement out of time.

2. If I separate from my partner there will be a 50/50 split of property.

Untrue.

When it comes to property settlement, there is a four step process which the Court will follow when determining such an application.  In summary, they are as set out in the decision of Omacini and Omacini (2005) FLC 93-218:-

1. To identify the assets and liabilities of the parties;

2. To consider the contribution of the parties, both financial and non-financial;

3. To consider the future needs as set out in section 75(2) of the Family Law Act (Cth); and

4. To consider whether or not the order proposed is ‘just and equitable’.

There has been recent case law which suggests that the Court may need to consider at the very outset, whether or not an order for property settlement is even warranted in the circumstances.  For example, these situations may arise in the rare and peculiar instances where a couple have not yet separated before an application for property settlement is made.

3. Why formalise your property settlement?

In short, formalising your property settlement is the only way to prevent your former spouse from making a claim for property settlement at some stage in the future.  Surprisingly, subject to leave being granted there is no time limit for a former spouse to make that claim if property settlement has not been formalised.

Furthermore, once leave is granted the usual approach for the Court is to take into account the value of assets at the time of the hearing.  That is irrespective of the time which has elapsed since separation, even if that is 20 years.  Obviously, there are valid arguments to be made regarding post separation contributions but there is no certainty as to how a Court may view the matter.

4. Can I apply for leave out of time?

The Court has the discretion to grant leave to a party to apply for property settlement out of time.

In the recent decision of Veggs & Riggs (No. 2) [2015] FamCA 911 Justice Watts granted leave to the husband who had instituted proceedings 20 years after the parties had separated.  Ultimately, the Judge held that the husband would suffer hardship if leave was not granted and the wife was not prejudiced by the delay in the proceedings.

In considering whether or not to grant leave out of time the Court considered the decision of Whitford (1979) FLC 90-612 wherein the Full Court said:-

“Thus, on an application for leave under section 44(3), two broad questions may arise for determination.  The first of these is whether the Court is satisfied that hardship would be caused to the applicant or a child of the marriage if leave were not granted.  If the Court is not so satisfied, that is the end of the matter.  If the Court is so satisfied, the second question arises.  That is whether in the exercise of its discretion the Court should grant or refuse leave to institute proceedings”. 

As to when this discretion should be exercised the Court provided that consideration as to matters such as the length of the delay, the reasons for the delay and prejudice occasioned to the respondent by the reason of the delay, and the strength on the merits of the applicant’s case and the degree of the hardship which would be suffered unless leave were granted.

In summary, whether or not an application to apply for leave out of time will turn upon the facts of each case.

5. Superannuation is not an asset.

Incorrect.

Prior to the introduction of the Family Law Legislation Amendment (Superannuation) Act 2001 (Cth) superannuation was not treated as property except in specific cases.  Since the introduction of the legislation, superannuation now falls within the definition of ‘property’ under the Family Law Act 1975 (Cth) and can be dealt with in the context of property settlement.

How superannuation is dealt with under the legislation is a complex matter given that there are many types of superannuation funds in existence such as accumulation funds, defined benefit schemes and self-managed superannuation funds.  They are all treated slightly differently and so it is imperative that legal advice be obtained when seeking to finalise property settlement matters.

It should be noted that whilst not advisable, it is possible to resolve some aspects of property settlement such as the transfer of real property without the need of a Court order this is not the case with superannuation interests.  A superannuation fund will require a Court order before a superannuation split can be effected.

Virginia Bui is a Family Lawyer at leading Australian Family Law Firm, Tindall Gask Bentley. Contact your nearest TGB office for further information or assistance.