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Finalising Your Financial Position After Your Relationship Breakdown

Finalising Your Financial Position After Your Relationship Breakdown

By Wisewould Mahony
March 22, 2016

Time Limitations Apply

There are time limits within which parties must finalise their financial arrangements after the breakdown of a relationship if such arrangements are to be binding.

If the parties have been married, an application for property settlement must be filed within 12 months after a divorce order has taken effect.  There is provision to file such an application out of time however these steps can be onerous and costly.

A party to a de facto relationship may apply for property settlement only if the application is made within 2 years after the end of the relationship.

How can property settlement be finalised to ensure that the agreement is legally binding?

There are two options available for property settlements to be finalised and ensure the agreement is legally binding:

  1. Property Orders may be made. After full and frank financial disclosure has been made by the parties and negotiations have occurred, the parties are able to finalise the agreement by way of an Application for Consent Orders together with Minutes of Consent Orders to the Family Court of Australia. If the court deems the draft proposal as just and equitable in all of the circumstances relevant to the parties, the agreement is formalised by the court by approving Orders that will be legally binding on the parties.
  2. The parties may choose to enter into a Financial Agreement. Parties have the option of opting out of the court’s jurisdiction altogether.  Financial Agreements do not have the status of being agreements approved by the court however they can be legally binding. The strength of the Financial Agreement rest in the requirement for both parties to make full and frank financial disclosure.  Once a Financial Agreement is made, the jurisdiction of the court does not have effect. However, the court does retain its power to set aside such an agreement. Although Financial Agreements are an available option to separating parties, they can be fraught with danger and need to be drafted with great care.
  3. Due to the complexities involved in drafting Financial Agreements, it is imperative that both parties to the proceedings receive legal advice in relation to which form of property settlement is most appropriate.

There are occasions where both options are exercised together.

Why seek legal advice sooner rather than later?

The financial asset pool must be valued as at the time negotiations are taking place, not at the time of separation. It is beneficial to settle property matters as property interests may increase or decrease over the passage of time, getting legal advice early is always best especially when the parties have interests in real property, corporate and trust entities, superannuation entitlements and the possibility of and inheritance on the horizon.

Peace of mind

The sooner property matters are finalised, the sooner the parties have peace of mind and the ability to move forward with certainty that their property interests are settled and protected.