Australia’s no-fault laws on divorce were established in 1975 with the enactment of the Family Law Act 1975. No-fault divorce laws make it easier to separate. Couples can now simply say their marriage has broken down, rather than needing one person to take the blame to get a divorce. The divorce process is quicker, less acrimonious and more cost-effective long term. However, separating couples still need to sort out their finances, including what happens with the family home and other assets and liabilities of the marriage or relationship.
What is a Financial Settlement?
A financial settlement is an agreement between you and your former spouse about dividing matrimonial/relationship money, assets and liabilities after separation. Matrimonial/relationship assets and liabilities form what is called a ‘property pool’. Upon separating couples agreeing to divide the property pool, an experienced Family Law Solicitor can draft an Application for Consent Orders or a Binding Financial Agreement to make the agreement legally binding.
How do I prepare for a Financial Settlement?
Before reaching an agreement, you should look to sort out day-to-day finances, such as:-
- Joint Accounts - If you have joint bank accounts, loans or credit cards, contact your bank as soon as you know you are separating. You may wish to redirect any wages or benefits into a separate bank account to create some financial independence.
- Assess your financial circumstances. Work out your current financial affairs, such as the assets and liabilities. You may like to attempt a 'kitchen table' agreement to determine how everything can be split. For example, if you have a home loan, can you afford to make the repayments moving forward? Who will pay for the home loan in the meantime? Will you be able to refinance if you decide to keep the house?
- Find out if you can receive financial support. Contact your bank, Centrelink and other government agencies to see what entitlements you have moving forward as an individual.
How long does a Financial Settlement take?
How quickly you can finalise your property settlement depends on the relationship between you and your former spouse and the complexities of your financial affairs. If you cannot agree on how to split your property pool, then you may need to ask the Court to decide on how to split your property pool. A Court will usually try to divide the property pool based on the ‘clean break’ principle, dividing your property pool to sever all financial ties. If you end up in Court, you will likely have to attend a number of hearings, which can take much longer than an amicable agreement.
Can my former spouse claim or start a Property Settlement after divorce?
In Australia, obtaining a divorce does not automatically end the ability to make a financial claim.
A divorce does not cut financial ties. Suppose you have not finalised your property settlement through a Consent Order or a Binding Financial Agreement. In that case, divorced couples can apply to the Court for a property settlement up to 12 months after the date of divorce. After which, divorced couples must apply for leave of the Court to proceed, which may be costly and difficult to obtain. To protect your property interests after divorce, you need a Consent Order or Binding Financial Agreement drafted by an experienced Family Law Solicitor before your divorce or within 12 months of your divorce.
If you are separated or thinking about separation and would like to learn more about splitting your property pool after separation, call us today at 1300 414 855 to book a free – no-obligation clarity call with an experienced Family Law Solicitor.