People who are going through a separation often think that a ‘Divorce’ covers everything, including parenting and property issues. That is not correct. A divorce alone will not adequately sever the financial relationship between you and your former partner. In order to properly finalise your financial interests, you need a property settlement. So, what is the difference between a Divorce and a property settlement?  

What is a Divorce?

Put simply, a Divorce is the official ending of a marriage. An application for a Divorce does not deal with your financial settlement or with parenting arrangements. In this sense, a Divorce is often seen as a mere formality to enable you to remarry .

What is a property settlement?

A property settlement is an agreement regarding the division of assets and liabilities following the breakdown of a marriage or relationship. This enables a person to end their financial relationship with their former partner. Or, in relation to a ‘pre-nup’, you can have an agreement to protect your assets in the event that you do separate from your partnerFor specific information regarding a pre-nup, click this link. A pre-nup provides you with certainty and protection in the unfortunate event that your relationship or marriage ends. 

What is included as ‘property’? 

Property from a relationship consists of anything of value which a person may be entitled to or in possession of, including (but not limited to):

  • Real estate;
  • Money in bank accounts/ cash;
  • Superannuation;
  • Inheritance;
  • Business and company interests; 
  • Shares; 
  • Jewellery;
  • Motor vehicles;
  • Caravans;
  • Coin collections;
  • Furniture;
  • Animals (for example, pets and cattle);
  • Boats.

It is important to note that, assets and liabilities acquired prior to the relationship and after separation can be included in a property settlement.

When should I arrange my property settlement?

You do not need to be divorced to have a property settlement. In fact, it is often desirable to finalise your property settlement prior to your divorce. There are several benefits to this, including: 

  • It avoids future disagreements over ownership of property;
  • It ensures that your financial relationship with your partner is finalised sooner rather than later;
  • The value of assets (including Super) may increase or decrease over time, which can affect the outcome of a settlement;
  • It gives you peace of mind and allows you to acquire other property without fear that you former partner will make a claim over it. 

Time limits  

You must be separated for 12 months before you can apply for a Divorce. You have 12 months from the date of your divorce to apply to the Court for a property settlement. Given these timeframes, it is generally preferable to organise your property settlement prior to your Divorce.