How do I record an agreement about division of Property?
It is very important that any agreement about property or finances is recorded in a formal way, to protect you against any future claim from your former partner/spouse.
There are two ways to do this:
- A Consent Order; or
- A Financial Agreement.
A Consent order is one made by a Court on application from both parties. No appearance before the Court is required. Once approved by the Court, the order will have the same effect as if it were made by a Judge after a trial.
A financial agreement is an agreement signed by the parties, expressed pursuant to certain provisions of the Family Law Act, that deals with financial arrangements on breakdown of a Marriage or de-facto relationship. Strict requirements need to be met to ensure Financial Agreements are binding, including independent legal advice.
Some of the the differences between a Consent Order and a financial agreement are:
A Consent Order:
- Must be first considered by a Registrar or Judge before it is made.
- Must fall within an acceptable range. If the Order does not, then the Order will not be approved by the Court.
- Will not finalise, once and for all, any claim for spousal maintenance.
A Financial Agreement is not required to be registered in the Court and is is most appropriate where:
- The agreement is unlikely to be approved by a Court; or
- There is a high probability of a spousal maintenance claim that needs to be excluded
Financial agreements can also be made while parties remain together in a de-facto relationship / Marriage. However, there are significant problems in enforcing these types of agreements.
For information on the consent order process, see our Property Agreements brochure:
How does a Court determine property entitlements?
A Court has a wide discretion in determing property entitlements. There is no presumption that property should be equally split. A Court must follow a sequence of steps to reach an outcome:
Step 1: Identification
All of the property that is owned by or in the effective control of either of the parties is identified and valued at its current value (not the date of separation) – this includes superannuation. A schedule of the current assets and liabilities must be determined, with a separate schedule for superannuation.
Step 2: Contributions
The Court considers the financial and non financial contributions of each of the parties to the marriage. This includes a consideration of parenting contributions. Contributions can be direct or indirect. Determining contributions is not about how money was spent, rather it is an assessment of the financial (and non-financial) inputs of each party. The Court will make a finding about contributions in percentage terms.
Step 3: Section 75(2) / 90SF Family Law Act Factors
The Court looks to the future arrangements for the parties, including care of children, age, health, earning capacity, responsibilities to care for others, and the duration of the Marriage / de-facto relationship. The Court will if appropriate make a percentage adjustment using all of those relevant factors. The Court must consider the actual economic impact (in dollar terms) of the adjustment it is to make.
Step 4: Review to ensure the outcome is just and equitable
Once the Court has made a determination of percentage based on the relevant contributions and future matters of the parties, the Court will take a step back to review the terms of any proposed Orders to ensure that they are just and equitable in all the circumstances. Often this involves consideration of whether an entitlement should be received as real property, cash, shares, superannuation or a combination of these things.
If you are involved in a dispute, or concerned about your entitlements, contact us for advice.