For many people, the end of a relationship is a time of change and upheaval. One of the many things to think about after separating from your partner is how to divide property and finances. You may feel reluctant to begin that process. This is understandable, but delay in doing something about dividing your property may cause unexpected, and sometimes unfair, outcomes in an eventual property settlement.
What’s the problem with delay?
Basically, it is that life goes on. The longer you delay your property settlement after separation, the more likely it is that your financial circumstances will change. For example, someone might purchase a new home, or accumulate significant superannuation entitlements. It is also not uncommon for a party to receive an inheritance after separation.
How will delay impact my property settlement?
The difficulty is that all property owned by each party to the relationship is taken into account at the time of the settlement negotiation or at the time of a Court hearing. This is even if those assets did not exist at separation. It can unnecessarily complicate settlement negotiations. You will first need to reach agreement about whether or not the property or assets acquired after separation should be treated or divided differently to the property acquired before or during the relationship.
A case study
In a 2014 decision, the Full Court of the Family Court highlighted the risks of delay in achieving a property settlement. In that case, the Court considered a property settlement for a couple that had separated 10 years earlier. They had been married for 21 years and had 3 children. The Husband was the sole income earner during the marriage and by the time of the hearing, his income was substantial. After separation, the Husband applied his income to accumulate significant property and superannuation.
The Full Court stated that the Wife’s role as the homemaker during the relationship assisted the Husband’s income earning capacity, and further, that the Wife had contributed indirectly to the property acquired by the Husband after separation.
Generally, and especially if you are intending or expecting to acquire new property after separation, you should take steps to progress a property settlement without delay. You should obtain legal advice as soon as possible after separation to receive tailored advice about the specific risks for our situation.