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.
