Separation is a particularly stressful time – you are juggling moving, arrangements for children and separating your finances. Then comes the issue of property. How do you agree on property settlement? What is fair for both parties? This article will explain how you and your ex-partner can choose to divide the property.
Property Settlement Options
The first option is to apply for a consent order from the court (you can do this either while applying for a divorce or after). Alternatively, you can draft a binding financial agreement (BFA) with your partner dealing with how you will separate property and financials. You can agree on a BFA before separation or divorce. Having a legally binding document can be useful because you must finalise property settlements within 12 months after the court grants your divorce.
Binding Financial Agreements
BFAs deal with the assets and liabilities of married couples, soon to be married couples or couples in de facto relationships including superannuation entitlements. A BFA sets out what should happen with the assets and financial resources if the relationship or marriage breaks down. By signing a binding financial agreement, the parties to the agreement agree that the Family Court will not decide on how to divide the property.
The Family Law Act 1975 (Cth) allows couples to enter into binding financial agreements before and after separation and divorce. They are particularly useful in situations where both parties separated still communicate with each other and can agree with how they will deal with property. It can eliminate the emotional and financial toll of legal proceedings.
Both parties must receive independent legal and financial advice before signing the agreement. Importantly, a court may determine the financial agreement will not bind the parties if they are dishonest about their assets and liabilities.
What If I Buy Property After Our Separation?
A BFA deals with the property and financial resources of each party at the time when they made the agreement. It can also refer to property during the marriage or at a later date. However, if the parties make a financial agreement after a divorce, it only deals with the property of both sides during the marriage.
Often, one partner will buy a house during separation because of the need to live elsewhere. If a BFA is not yet in place, then it is important that the agreement specifies that it only deals with the property during the marriage and not separation. It is also important to make sure that you are honest about what you own while you are putting together a financial agreement.
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