Property Settlement . After 20 years as a Family Lawyer, and 14 years as an Accredited Family Law Specialist, I have formulated some guidelines for a property settlement. My advice below is a general but a handy guide to first steps in a Divorce property settlement. If you need other questions answered, or need to speak to a member of my top Family Law team about your particular situation, please phone us for a free 10 minute chat, or email us on enquiries@journeyfamilylawyers.com.au for a confidential and free chat.
As if people thinking about Divorce or separation in Queensland didn’t have enough worries with the floods and the cleanup! Now we have dropping house prices and downturns in business and share prices as well. This obviously impacts on peoples’ ability to get property settlement sorted and can result in more Court cases in the Family Court. Today I thought I’d talk about some strategies to help you through and also comment on the way this has been played out in Court cases and settlement mediations throughout the past year in my firm, Journey Family Lawyers, and also what I have heard from other Family Lawyers.
In property settlement, the first step is to calculate the assets. This is easily achieved by valuing the assets or selling them! Just be careful that you never rely on old valuations where property prices are dropping, you should make sure your valuation is no more than about three months old.
If you have Superannuation, then, like shares, the value may have dropped to a disappointingly low level. This is not so easy to swallow, and the best thing you can do is accept the losses and move on. It is what it is.
Values of assets are an issue for the final stage of property settlement proceedings under section 79(4) of the Family Law Act. But what happens during the initial separation? In our article, “Separation advice: Before you go“, we talk about strategies for those early, difficult days. It helps if you think about separation in two stages, the interim, immediate stage and the long term plans and outcome that you want to achieve.
So, close your eyes and take a deep breath. I want you to visualise how your life will be after you have sorted this mess of separation out. Some people see themselves in a rented unit or house, others see themselves in their own home, bought with the proceeds of sale of the joint property, and still others plan to buy their partner out of the current joint home.
Whichever plan you have, you can see that it won’t be achieved instantly, no matter how amicable your settlement will be and however friendly your separation is. In the current housing market, you can expect to have your house for sale for over 100 days before it may sell. You may need to consider reducing prices. Don’t worry too much, because you will be presumably buying your new property in the same low market.
But, you need a short-term plan as well. One that can keep you comfortable and secure until the finances are untangled. This is the tricky one. So, a couple of FAQ’s.
- The person who stays in the family home usually has to pay the outgoings, such as mortgage rates and insurance etc. I say usually, because there are exceptions, such sometimes where the children are in the home as well, or where the bank is chasing the joint mortgagors. The idea of the person who stays being responsible for the payments is one that the Family Law Cases has generally endorsed on the basis that the other party presumably has to get their own accommodation and will be paying for that.
- Leaving the home does not mean you have somehow abandoned your right to have it considered in ten property settlement.
- If you have a car registered in the name of one person, but it is agreed that the other person can have it in the short or long term, that is fine, but if the non registered user of the car does not pay the registration, or insurance, then it is the registered owner who may be liable.
- Medical insurance is usually in the Family Rate at the time of separation. Be careful about relying on the other party to make the premium payments. I often advise my clients to check that the payments have been made each month. Ultimately you need to get separate health insurance but many people find it easier to keep it joint in the short term, especially when everything is in chaos in the early weeks of separation. This is particularly useful and important if you have kids.
- Furniture, whilst important is not the be all and end all. If taking a particular piece of furniture is going to damage your relationship further than it already is damaged, you might like to reconsider. If you take the ” removal truck” option, where you take everything and just leave very little, then you should not be surprised if your ex will not negotiate with you on the rest of property settlement. Try to be very fair. It may pay off when it counts, say in property settlement or in kids matters.
- Take all of your papers, and copy all of the joint ones, or take them and copy them at a later date. You can always give them back. But you may spend a lot of money with lawyers finding out information that was already available to you in your cabinet before you left.
- Finally, take your photos, trophies, sewing, tapestry, music or rock collection, or whatever it is that is precious to you and irreplaceable. If it should be shared, you can give it back later, or have it valued later, but if it is one of a kind, and valuable mainly only to you, take it now, when you go. Otherwise I am afraid it may well disappear (I have seen it happen often), or be regarded as unimportant by the Judge in the final property settlement. These are the things that you will regret losing and for which money is not a substitute.
So get yourself settled in a way that you can afford, with the things such as insurances and your personal items safely with you. Don’t upset your partner unnecessarily. Make sure that between you both all the bills are still being paid. Be aware that this is just a holding pattern, and don’t let the emotion of the break-up make you foolish about these things.
Think about what you want to achieve in the future with your settlement. Reality check this with friends and then give your lawyer the goal posts. Hopefully a friendly civilised property settlement will be yours within the year!
Our firm knows the pressure that unresolved property issues brings to your daily lives and we will do everything we can to get a speedy resolution through either mediation, negotiation or if necessary, strong and decisive representation in Court.
I hope this helps, email me or send a question to Journey Family Lawyers at enquiries@journeyfamilylawyers.com.au. Someone will get back to you usually within a couple of business hours for free. Or phone us on one of the below listed numbers for a free 10 minute consultation
Kind Regards,
Hi, Divorced for approx 6months, investment property under ex husbands name only. If transfered over to me, will I encumber the capital gains tax if I sell it later?
I have never had my name on any mortgage, so will I be a first home buyer?
Thanks
Adrienne
Adrienne,
Hi.
You have two main issues, firstly that of property settlement and secondly, the tax implications.
In relation to property settlement, to effect it in a legally binding way, you must deal with all assets, real estate, superannuation, cars, shares and so on. As well, any agreement should be in a legally binding form and you really need to see a lawyer about that. If you do not do so, either party can come back against the other at a later date and if you have improved yourself since separation (or his situation has deteriorated), it could disadvantage you.
You also need to bring any application within twelve months of the dissolution of the marriage so you should give this your urgent attention as you only have six months to go.
With the tax issue, there should be no stamp duty on the transfer if it is pursuant to a formal agreement. However, tax is another matter and you may end up being responsible for the capital gains tax of your Ex. A lot depends on your individual situations and you should talk to an accountant before agreeing to any proposal.
In summary, I strongly suggest you see al Family Lawyer as soon as possible.
My husband and I have decided to separate. We jointly own a mortgaged property. He is happy to give me the property. Do I still have to pay stamp duty and/or capital gains tax if it is a gift?
Hello, it is good that you have almost settled your matter. To qualify for some of the exempts and partial exemptions to which you refer, you need t make sure that you get legal advice so that the transfer is recorded in the appropriate FamilyLaw document. It is not enough to just transfer the property, as it will attract some of these taxes, usually. Go and see a lawyer and find out where you stand and if the distribution is fair . Remember Superannuation is also property to be divided.
Best of luck,
Lynette
Hi, My husband and I have been separated for 6 months and have privately agreed to separate our joint debts evenly as we both as individuals have been unable to take out consolidation loans to separate these debts. I have been paying my share of the debts routinely but have just found out that my husband has not. I need to get these debts separated and am not sure how to go about this. Also I have full care of our daughter and we have agreed to a private arrangment with child maintenance which he has paid routinely but am I still liable for 50% of the debt if I have to raise my child. We did have a visitation agreement but he has opted to move away for work
Hi Kelly, firstly I would like to apologise for the delay in replying due to the busy Christmas period. To formalise your property settlement agreement a Consent Order may be filed in the Family Court of Australia. The Court generally strives to end the financial relationship between parties so both parties can move on with their own lives. The arrangement that you propose will continue the financial ties between you and your Husband. It is possible to include provisions in a Consent Order as to refinancing so as to end the financial relationship as if the debt is not separated, you are responsible for the debt if you’re a joint account holder. As to your child support agreement, certain agreements may be lodged with the Child Support Agency. I suggest that you contact our office for a reduced rate one hour initial appointment for $143.00 for further advice concerning the allocation of debt and whether a Consent Order may assist.
- Joshua Peters, Associate – Spring Hill Office
Hi there. My husband and I have been married for 5 years and before that we were living together for 5 years too. Therefore, we have been together for 10 years. We are now separated. However, the house that we lived in is not in my name but his. Does this mean I leave without a single cent?
Hi Ann Marie, firstly I would like to apologise for the delay in replying due to the busy Christmas period. The entire length of time that you both lived together is considered in assessing property settlement entitlements. The asset pool for division between the parties consists of all assets and liabilities in your name, your Husband’s name and joint names. It does not matter that the home is not in your name as the Court’s view of the matter is that you have an equitable interest in the property. To ascertain the entitlements of each party the contributions, both financial and non-financial are looked to. In addition, the future needs of each party have an impact upon the entitlements of each party. As a first step, you need advice as to your property settlement entitlements. I suggest that you contact our office for a reduced rate one hour initial appointment for $143.00 to obtain such advice.
- Joshua Peters, Associate – Spring Hill Office
My wife is 58, myself 50, children are 22 and 20 but both living at home. If we were to divorce should I expect the distribution of all assets to be 50/50 or would my wife receive a greater portion?
Hi Abe,
Under Australian matrimonial property law there is no presumption of an automatic 50/50% split of matrimonial property upon separation or divorce.In deciding the percentage division of matrimonial property between a husband and wife the court takes into account a wide range of considerations eg the financial and non financial contributions of the parties to the acquisition , improvement and maintenance of the matrimonial property pool and their contribution to the welfare of the family unit , the age and state of health of the parties , their respective income earning capabilities , whether either party has a financial resource such as superannuation which has not yet vested or the expectancy of an inheritance. We would need to receive detailed financial information from you regarding the contributions of both parties to building up the matrimonial assets and the future financial needs of the parties before we could give you an accurate opinion regarding your likely percentage share.
- Don Gassner, Strathpine Lawyer
I recently left my co-owned matrominal home with my 3 yeard old son and moved into my other property (owned by myself only). Do I have to still pay half of the mortgage of co-owned property as I now longer live there? Does my ex defacto have to pay all or what would be his share? Most importantly, do I have to give my ex partner access currently as their is a history of drug abuse by him? He is wanting to have my son overnight and see him numerous times a week. He has organised private mediation for early next month. Not sure what to do.
Dear Debra
Sorry for the slight delay in our response – it is a busy time of year. It’s difficult to give you a definitive answer without a little further information in relation to the property side of things. Generally speaking however, if one party vacates the matrimonial home and takes up residence elsewhere, the party remaining in the matrimonial property should be paying the mortgage and associated living expenses as they are enjoying the benefit of that property. Working out who pays what can be relatively straight forward immediately following separation if the other party (which is you in this circumstance) is needing to pay rent or mortgage repayments in their alternate accommodation. In the event you are meeting the costs associated with living in your other property then common sense should hopefully prevail and each party should be responsible for paying the mortgage/rent and other living expenses associated with your respective accommodation however, it can be a little tricky if say for example you do not have any rent/mortgage repayments where you’re currently residing and your ex-de facto is the only one paying for rent/living expenses. Should this be the case, you may need to negotiate with your ex-partner to work out a suitable arrangement just to make sure your mortgage remains serviced. In any event, make sure you are mindful that your name is still attached to the loan and therefore are legally jointly responsible for the debt. If you are concerned about how to best approach this in the interim, or you are concerned your ex-partner will not meet the repayments, you may want to consider obtaining more detailed advice on your particular circumstances so a sensible arrangement can be made in the interim.
In relation to your concerns about your 3 year old son, whilst you do have an obligation to facilitate and encourage a meaningful relationship between your son and his father, you of course need to do what you believe is best for your son at present. Should you have legitimate concerns that your son may be exposed to drug use or at any risk of harm, then you need to prevent this exposure occurring. With this said however, there are other ways to facilitate time/contact between your son and the father that won’t place your son at risk. These may include supervised visits, telephone contact or even skype contact where your little guy can speak with and see his dad via webcam. Obviously it is limited given his age so we always recommend discussing these issues at mediation. Remember when at mediation though, that any care arrangements proposed for a child of 3 years old needs to be age appropriate and reasonable in all circumstances. If drugs are a concern, request the father submit for a drug screen – this might help with some peace of mind. Hope this helps!
Regards, Melissa Cable – Strathpine Lawyer
Wife wants separation , house paid in full and all debt to fall on me and I have the kids as well, 12 and 8. She did have a property before we met and we built off it’s equity and built up two properties both roughly worth 400k each and have mortgage of about 390k remaining. You don’t have to be a math whiz to see that the last 15 years I spent building a life for my family is nothing in her opinion.
I am not bitter, and want the best possible outcome for the kids and her but this is not realistic assessment, what action do I need to take to protect my children’s interests ?
Dear Len
Sorry to hear you’re experiencing a difficult time at present. Providing advice for property matters, particularly when there are numerous properties and real estate that was owned by one of the parties prior to commencing the relationship, if difficult to do on the bare basic facts. The law attempts to effect property settlements between parties in an equitable and just way and as such, numerous factors are taken into consideration. These include initial contributions (ie: your Wife entering the relationship with real property); financial and non-financial contributions throughout the relationship and any applicable future needs factors such as the primary care of the children, earning disparity etc. As you remain the primary carer of the children and your wife appears to be placing unnecessary stress on you, and may potentially have unreasonable expectations regarding how the property should be divided, we recommend you come in for more detailed advice. We offer one hour initial consultations at any one of our four branches at a reduced rate of $143 including GST. Feel free to call us on (07) 3832 5999 to schedule a time, we look forward to assisting further then.
- Melissa Cable, Strathpine Lawyer
Hi, i have not blogged before so hope this works! My husband/now ex and I are separated and trying to work out our settlement percentages we are entitled to and are struggling due to differences and our own lawyers differing advice. Is there not anywhere we can go and pay one person/lawyer to look at our history and who will just say this is what I am entilted to and this is what he is entitled to? We want to do this nicely and without creating stress/anger/strain in an already difficult situation. Thank you!!! Kylie.
Hi Kylie, this is very wise of you. I think you should consider either mediation, ( which may or may not wget you an outcome) or arbitration, which will get you an outcome but you sort of lose control becasue in an arbitration you agree to be bound by the arbitrator’s decision.
Here is the link to the Australian Institute of Mediators and Arbitrators. I think that you should discuss this with your lawyers, and decide which way is right for you.
http://www.iama.org.au/arbitration.htm and a more general description is here at
http://en.wikipedia.org/wiki/Arbitration
The actual part of the Family Law Act that gives the power is at http://www.austlii.edu.au/au/legis/cth/consol_act/fla1975114/s13e.html Cheers Kylie, and I hope this helps, Lynette.
I am trying to obtain financial separation settlement as there is a business involved. My ex has cheated on me and and the new girlfriend has put her contact numbers with our main contractors and started a new business name under her name. She is also now using our last name. He has not as yet turned up to any proceedings but his lawyer has. The conciliation is next week. Any advice as to these issues and how to finalise this.
Hi Jo,
What a mess!. If your ex’s girlfriend has the same clients, and if that client list was obtained through your ex, then I think you have an argument for saying that it is the same business. It should therefore be notionally added back into the asset pool and then attributed to your Husband as if it were still in his possession.
In other words, say the business was worth $20,000 ( just a madeup figure for this example) , and say the other assets were valued at a total of $60,000. This would make a total for the purposes of the trial , of $80,000. This is even if the business is completely gone to his girlfriend and neither you nor he can get it back.
Ok so of the $80,000. say for arguments sake you were entitled to 50/50. ( Again this is an example only , it may not be 50/50. Your lawyer will be able to tell you your likely entitlement.) Ok , so half of $80,000 is $40,000 each, say. Your Husband has already either got or wasted $20,000 being the business, so he only gets another $20,000 of the rest of the assets and you would get the $40,000 that is left. So you see, if you are able to prove it is the same business, it is likely that you won’t actually be out of pocket in this scenario. It will depend of course on what proportion of the entire assets the business is. Good Luck at the conference!
Kind Regards Lynette
Hi,
If I have full custody of the children due to my partner being in a mental institution, do I receive a higher percentage of the house when selling? Thanks
Hi I live in NSW and was wondering what are the consequences of not having agreed on a settlement within 12 months of being divorced. Can we come to an agreement on a settlement after the 12 months has elapsed, as we are in no hurry to sell the house and divide the assets
Regards Brad
Hi Brad,
well the Family Law Act states that it only has jurisdiction for 12 months after the divorce becomes final. If you want the court to make orders ( whether contested or not) after that time, it is at the discretion of the court and is regarded as being Out of Time. The Parties have been able to consent to the application being made out of time in there Consent Orders in recent times, but I am fairly certain that this is actually unconstitutional. It may still be the practice if you ever try to lodge Consent orders and you may vbe able to get around the “out of time” issue by making the first order one that says that you both agree to the Aplication being lodge dout of time. I wouldn’t risk it though.
I think you should do up Consent orders or something like that while you are still friends and in the time limit and get it lodged, You don’t have to actually have sold the house or taken your shae of the other assets to draw up Orders, but you need to have the plans for finalising your financial relationship laid out in the consent orders. If you don’t agree, or can’t agree, then you will have some trouble applying to the Family Courts because you will have to demonstrate hardship before the courts will entertain you application for property settlement. All expensive and stressful. Don’t forget Superannuation.
If your husband has cheated/been unfaithful, legally are you entitled to more financially.
Hi Tracey,
The answer is no. It makes no difference.
Kind Regards,
Lynette
My husbad and I are seperated and he has been able to access credit cards in my name solely and used them for cash. Where do I stand with this??
Hello, June. We were both on the blog at the same time so I saw your question come in just now. I hope you have taken steps to block your Husband’s access to the cards now. As for where you stand, there are 2 answers. The first answer is in relation to how you stand with the Banks, which is that you are liable as far as they are concerned.
The second is how you stand in relation to property settlement. Generally the courts would take the money he took as a premature distribution of assets to himself and notionally add the money back into the pool. In other words, they would treat it as part of his property settlement that would come off his share.
Kind regards,
Lynette Galvin
Thanks for that advice. My husband is living in the property and not working. I am also living in the home and struggling to pay all bills, food etc. Is there any way I can get him to leave as he is not willing to go as he can’t afford anywhere?? I can go and rent but I won’t be able to meet mortgage and bills on home as well as rent.
Hello again June,
Can you sell your property? I mean, I supppose, can you afford to buy him out, or does it have to be sold eventually. If you bought him out, (with proper documents prepared so he cannot come back at you for more when you get back on your feet,) then he would presumably have enough money to set himself up again. Lots of factors impact oon youir situation though, because if he can’t work as opposed to won’t work, then you may need to give him a bigger cash settlement and support him by way of spousal maintenance from your income for a little while or for a long time. I would say that this is general advice but it can be resolved. I think you may feel a bit sorry for him. If you want to sort it out, then you may need to take steps in the court and also be prepared to refinance to pay him out. People generally find the ” limbo” situation like you are in at the moment to be the most stressful, and they feel much better when they get it sorted out. I am not advocating breaking up your marriage here. If it is salvageable, youI recommend counselling, but if it is not, sometimes the best thing to do is end your financial relationship.
Good luck, June.
Kind regards,
Lynette