HOW DOES A COURT DECIDE A PROPERTY SETTLEMENT?
When it comes to a property settlement there is no mathematical formula that the courts use when deciding who gets what. However, in Australia, the Federal Circuit and Family Court of Australia uses a 4 step process for determining property splits This process allows for the courts to look at the full set of circumstances and make a decision based on all factors as to what they believe is the fairest decision for all.
WHAT ARE THE 4 STEPS FOR A PROPERTY SETTLEMENT?
BUT WHAT DOES THAT MEAN for my property settlement?
Simply put conducting a property settlement isn’t a case of 50/50 = fair. Nor is it a case of comparing what your best friend’s neighbour got and asking for more or less.
You need to consider your relationship and your lives. Whilst remembering that this is not a cookie cutter exercise. It is very easy to forget about the decisions that you made throughout your relationship. For example, one of you may have been a stay at home parent, whilst the other worked. Whether this was an actual conversation or just the way it all ended up, nonetheless, this is what you both did then. Neither of you will be punished for the decisions you made as a couple.
But it still needs to be balanced, equitable and fair. Not necessarily even.
To help explain the 4 steps in more detail, I have put together an information sheet that you can download here.
WHAT ARE THE TYPES OF PROPERTY AGREEMENTS you can make in a property settlement?
There are 2 types of agreements when it comes to a property settlement. They are:
- Court Orders
- Binding Financial Agreements
A court order can be made by consent. Or it can be made by a Judge. The difference is whether you agree on what is in the order.
If you agree this will be a consent order. That is, an order where you both agree to the terms within it. Obtaining a consent order is really more of an administrative process and can usually be done without either of you stepping foot inside a court room.
If you can’t agree, then a Judge can make the decision for you. Whilst, this is more complex and costly (both in time and money); ultimately, a decision will be made on how the property should be divided.
Binding Financial Agreements
The other option is a binding financial agreement. Which is done before, during or after the relationship.
As the Court does not need to approve Binding Financial Agreements, they can provide more flexibility and allow for more creativity when coming up with an agreement. That being said, it must be prepared by a Lawyer and both of you need to get Independent Legal Advice before entering into the agreement. Thus, it can cost more in legal fees compared to a consent order.
Finally, in order for the agreement to be binding there are criteria that need to be met. You can see that this is by looking at sections 90G (for Financial Agreements about marriages) and 90UJ (for Financial Agreements about de facto relationships) of the Family Law Act 1975.