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.
This is general information only. Please contact the team at Tonkin Legal for expert legal advice that takes your unique personal situation into account prior to making any decisions based on this article.
