If you are in the fortunate position of having reached an agreement with your separated spouse about financial issues, your friends, or your googling, may have informed you that there are at least two ways (which are legally enforceable) to document a property settlement.
What are my options?
The first of these is to make an application to the family law courts accompanied by a document called 'minutes of orders' and, when they are ultimately approved and made by the court', 'consent orders'.
The other alternative is a financial agreement.
Making a decision about what documents to use (or whether you might use both) will depend upon your personal circumstances.
For example, if you have children and wish to make parenting orders at the same time as your property settlement orders and spousal maintenance is not an issue for you, an application and consent orders is likely to be the best approach.
Although it is always incredibly helpful and prudent for both parties to have their own lawyers to prepare, or at least review, the documents, it is possible for only one party to have a lawyer and for the other to be self-represented if filing documents in this format. It is also possible for both parties to be unrepresented (although this is like doing your own electrical work).
Consent orders are not always ideal as people often have:
- an agreement on the larger issues that may or may not be appropriately within the range that the court will approve
- no ability to draft the legal documents themselves
- overlooked many important issues that create misery in the future.
For example, when giving second opinions, I have seen documents where the property to be transferred was not correctly referred to but the transfers had already been lodged, meaning that stamp duty and capital gains tax were immediately payable because the orders were not correctly done.
Similar disasters are leaving out whole categories of assets or misunderstanding how assets are held (for example, assets held in companies or trusts and not dealing with those in a way that works from a legal perspective) or overlooking, or even creating, income tax problems.
Many people, either under pressure from the other spouse or just because they have accepted this myth, will agree to an equal division of assets, when that outcome is not in fact appropriate.
This is why it is always helpful, if you can budget for the time and money, to see a lawyer, who can, at the very least, review the documents you have prepared, give you some tips and ideally prepare the various forms for you in a way that will avoid requisitions by the court or by government agencies, such as the Office of State Revenue, the Titles Office or, most alarmingly, the ATO.
A financial agreement can also document a property settlement and, provided the person receiving spousal maintenance under an agreement is not in receipt of a Centrelink benefit, this is the ideal form to contain both property settlement and spousal maintenance issues.
For all these documents, disclosure of each person's financial holdings is essential. Even if you are both entirely conversant with your own assets, there should be some record of you each having exchanged financial documents and being given the opportunity to request more documents and or obtain valuations of assets.
This may seem very tiresome, but the process is actually part of how you obtain protection from any further claims. Claims to set aside an otherwise binding agreement or order are most often made on the basis that one party failed to make full and frank disclosure of their true financial position.
It is not uncommon for people to informally divide their assets. For example, they might only have very modest personal belongings and some motor vehicles, which they sell and then divide the proceeds.
This is all very well until one party prospers and the other party comes looking for a share of the assets.
It is possible for the court to do a tracing exercise to see what each party has done with their marital assets and where they have turned up; even years later.
Surprisingly, lots of people do this even when there is a significant amount of wealth, without seeming to realise that a handshake deal:
- leaves them open for a claim indefinitely by the other spouse
- does not protect their post separation assets from such a claim.
If they have transferred assets pursuant to their informal agreement, they may have unnecessarily paid stamp duty and, potentially, capital gains tax.
For all these reasons, documenting your hard-fought property settlement properly is vitally important for your financial security and your peace of mind.
Cooper Grace Ward is a leading Australian law firm based in Brisbane.
This publication is for information only and is not legal advice. You should obtain advice that is specific to your circumstances and not rely on this publication as legal advice. If there are any issues you would like us to advise you on arising from this publication, please contact Cooper Grace Ward Lawyers.