Have you recently separated from your partner? Have you formalised your property settlement by way of a Consent Order or Financial Agreement? This article explains why you should formalise your property settlement.
If you do not formalise your agreement you leave yourself open to a property settlement claim being made against you in the future. Say, for example, you separate from your partner, divide your assets by agreement but do not formalise the agreement and six months later you receive an inheritance. You are at risk of your former partner making an application to the Court seeking a “second bite” of the property pool. If they made that application, the Court would take account of the value of all assets at the time of the Court Hearing. Any additional assets acquired following separation or any increases in value to property or superannuation will form part of the property pool available for distribution between you and your former partner. Similarly, if your former partner sells an asset following your separation the pool of assets to be divided between you is reduced, potentially to your detriment.
While there are time limits for formalising your property settlement, a person can apply for leave to make an application for ‘out of time’ if they can satisfy he Court that hardship would be caused if their application was not heard. So, you cannot assume that you are not at risk even if the time limit has expired.
Another reason to formalise your agreement is to receive tax concessions. If you have agreed to keep the family home as part of your settlement you will be exempt from having to pay stamp duty on the transfer of ownership from your joint names to your sole name if your property settlement has been documented in a Consent Order or Financial Agreement. Stamp Duty exemption may save you thousands of dollars.
Sadly, if you have not formalised your property settlement and your former partner does not do what they promised they would do, there is little recourse available to you. Whereas, with a Consent Order or Financial Agreement, you can apply to the Court to enforce the terms of the Order or Agreement.