When Do I Need to Do My Property Settlement?

By 26 May 2021Property Law
When Do I Need To Do My Property Settlement?

The window of opportunity for making an application for a division of property under the Family Law Act 1975 is:

  • For de facto couples, between the date of separation and two years from the date of separation;
  • For married couples, between the date of separation and up to 12 months after a divorce order is made, noting that the earliest a party can apply for a divorce is 12 months and 1 day after separation.

Although the window of opportunity to apply for a formal property order in de facto couples is relatively narrow (two years from the date of separation), the window of opportunity for married couples is potentially much greater, depending on when, or even if, a divorce order is made.

For both married and de facto couples, any application for a division of property under the Family Law Act 1975 that is made outside the relevant time frame can only proceed by consent of both parties or with the permission of the court.  It should be noted that the circumstances in which the court will grant permission to allow a party to proceed with an application for property orders filed outside the specified time frame are limited.

Separation can be one of the most stressful experiences in a person’s life so it is understandable that many people delay doing a formal property settlement.  Delaying a formal property settlement however can carry with it considerable risk.

A significant risk with delaying a formal property settlement is that the asset pool can and often does change in the period between separation and when the final property settlement is completed. The family law authorities make it clear that the asset pool should be determined as at the date of hearing. In other words, the asset pool that is available for division is the asset pool that exists at the time the final property settlement takes place.

The asset pool that exists at the time of property settlement is often very different to the asset pool that existed at the time of separation. Some common examples of this are as follows:

  • the family home may have increased in value;
  • mortgages may have been paid down thus increasing the equity in the property;
  • some debts may have gone up;
  • new assets may have been acquired;
  • other assets may have been sold;
  • Superannuation entitlements may have increased;
  • One or both parties may have received an inheritance after separation.

Changes to the asset pool in the post-separation period can be particularly challenging for the party wanting to retain an asset that has gone up in value such as the family home which may have risen in value due to market forces.  As a result, the party wishing to retain the property may have to pay out the other party a larger sum of money to reflect the increase in the equity of that property.

The longer the time that elapses from separation to the time when a final property settlement takes place, the more difficult it can be to assess the parties’ contributions to arrive at a property settlement that is just and equitable.

So don’t delay. Get on the front foot and get early advice with our Wodonga & Albury Business Lawyers team at Harris Lieberman Solicitors.