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Financial Settlements

Financial settlements in family law play a crucial role in ensuring the equitable distribution of assets and financial resources when a relationship ends. It is important to note that financial settlements at the end of a relationship can be reached privately, through negotiation between the parties. Especially after a shorter relationship, it may not make sense to involve the court system to divide a small pool of assets. But regardless of the length of the relationship or the size of the property pool, it is very important for both parties to receive advice about their legal entitlements in terms of a financial settlement.

In Australia, these settlements are governed by the Family Law Act 1975. This is Commonwealth legislation, so it applies across all states and territories (although there are some special rules for de facto couples in Western Australia). In terms of financial settlements, the aim of the legislation is to provide fair and just outcomes for separating couples. The Act establishes a four-step process to guide the courts in making financial orders.

Establish the Property Pool

The first step in a financial settlement involves identifying all assets, liabilities, and financial resources of the parties, both jointly and individually. This includes properties, bank accounts, investments, businesses, superannuation funds, and debts. The current market value of these assets, less the amount of the liabilities, is the total value of the property “pool”.

It is important to understand that this pool of assets and liabilities does include those things that are only in the name of one person, or which were incurred or acquired prior to the relationship starting.

Assess Contributions

The second step involves identifying the financial and non-financial contributions made by each party during the relationship. Financial contributions refer to income, property, and other financial resources that each person brought into the relationship. Non-financial contributions include activities such as homemaking, childcare, and renovations.

The aim here is to determine how much of the property pool was contributed by each person. However, even if one person made all of the direct financial contributions, this does not mean that they are automatically entitled to a greater share of the property pool. If the other person made different contributions – such as caring for a home and children while the other party worked – then they may be entitled to just as much, or even more, than the party who made the financial contributions. 

Consider Future Needs

The third step involves considering the future needs of each party. The aim is to ensure a fair outcome by providing for the reasonable needs of both parties for the rest of their lives. If one party has higher necessary expenses or less capacity to earn income, they may receive more of the property pool to provide for their future needs. Factors such as age, health, income-earning capacity, care responsibilities, and financial resources are taken into account.

Assess Overall Fairness

The final step involves assessing whether the proposed settlement is fair and reasonable in all the circumstances. If the matter is before the Family Court of Australia, the Court has the discretion to adjust the division of assets and liabilities if it deems it necessary to achieve a just outcome.

Getting Help from Your Lawyer

As soon as you have separated you can make arrangements to split your property with your ex-partner. If you are married, you do not have to wait until you are divorced. Most property settlements can be finalised without having to go to Court.

If an agreement has already been reached between you and your ex-partner, we can prepare the necessary documents to finalise the arrangements, so they are legally binding. We will explain the effect of your proposed settlement to ensure that you understand your position and the implications of your agreement. We can then assist with the process of splitting or transferring assets in accordance with the agreement.

We can also negotiate on your behalf with your ex-partner’s lawyers to reach a fair division of property, explain your legal rights, and represent you in informal settlement negotiations or other dispute resolution processes. If Court proceedings become necessary to enforce your rights, we will guide you through this process and advocate strongly on your behalf.

Dealing with the complexities of a property settlement is stressful but the consequences of not doing it properly can impact the rest of your life. We are experienced negotiators and will make sure that you get the best possible outcome.

To find out how we can help you, email [email protected] or call 03 9870 3252 for a confidential discussion with Fiona who is an experienced family lawyer in Ringwood.