Family Law – 5 Reasons to do a Property Settlement
Melinda Love, Family Lawyer, answers the frequently asked question: ‘Why should I do a property settlement?’
Talking about the division of property is often the last thing that a separating couple wishes to do. The idea of negotiating and formalising who will take certain assets, who will pay off each debt and how the superannuation will be divided seems to be a mammoth task. With the assistance of the right lawyer, however, the process can be straightforward and the results worth the effort.
There are many reasons why you should do a property settlement. Here are five of the best:
- Get what you are entitled to under the Family Law Act 1975 (the ‘Act’).
Under the Act, de-facto couples have two years from the date of separation and married couples have 12 months from the date of divorce to finalise their property settlement, with some strict exceptions. It is in your interest to ensure that you get what you are entitled to within this time frame. You don’t want to look back and wish that you had retained more assets or super or pushed back with some of the debts and realise it is too late.
- Minimise the risk of the other party having another bite of the cherry.
Many couples choose to informally divide their property without the assistance of the Court or lawyers. While this is an appealing option, it fails to provide certainty and finality. A couple of years down the track from separation, one party may change their mind and ask for more money or claim that the property division was not just and equitable. If this is the case, the Court will consider the value of the property at the time of the hearing rather than the property that the parties had at separation. By formalising the property settlement properly, at the time of separation, you can move on with your life with the certainty that the property you hold is yours to do with as you wish.
- Protect assets and work out who will pay expenses in the interim.
An important part of any property settlement is a discussion about how expenses will be shared until the final property settlement has been completed. To minimise late fees and a diving credit rating, parties must clarify who will meet the loan and credit card repayments and how household bills will be divided. Perhaps more importantly, one of the earliest steps of a property settlement is to identify which assets can be accessed by both parties and locking down any redraw facility or the use of credit cards. By working through these steps, you can feel more confident that your assets will be preserved while you negotiate the property settlement.
- Open up communication.
Although it may not seem it, working through a property settlement can open up communication between separating parties. If thoughtfully conducted, discussions about the big issues in relation to property can make it easier to talk about the smaller items to be worked out – such as the division of personal property and closing joint accounts. This is particularly important for separating parties with children, who will need to establish respectful communication and open negotiations to allow them to co-parent. Once the property settlement has been completed with minimal hostility, there is space to move forward. If talking is too difficult, we can assist with negotiations to start the ball rolling. We can also point you in the direction of qualified mediators trained in the art of discussion.
- Benefit from a Stamp Duty concession.
If real estate is transferred from joint names to one name, or from one name to another, as a result of a formal property settlement, the party ‘purchasing’ or buying out the other is entitled to a stamp duty concession. This will reduce stamp duty payable to a nominal fee – currently $20.00. To benefit from the stamp duty concession, you will need to have a Financial Agreement or Court Order in place. This factor alone is often reason enough to formalise a property settlement.
Keep in mind that while a property settlement has all of the above advantages, it does not automatically override or change your child support obligations. If you wish to make an alternative arrangement for child support, please contact us to discuss a Child Support Agreement.
What’s next?
Contact Legitimate Solutions Legal to schedule a free 30 minute appointment to discuss your property settlement. We offer comprehensive, practical advice and fixed fee pricing where possible.
This is general information and should not be relied upon as legal advice.
Published 22 March 2017.
