When a couple decides to separate, it will be wise to divide their joint properties to avoid future problems.
You do not need to be divorced to divide your joint properties.
What are Joint properties?
The parties’ joint properties include all the assets and properties which you and your spouse own, within Australia and outside Australia.
Houses and apartments, companies and businesses, all real properties, cars, bank account cash, stocks and shares, furniture, jewelleries, superannuation are all included.
Similarly, joint liabilities should also be divided. These include mortgages, personal loans, company loans, car loans, credit card loans, any debts which the parties owe before separation.
Two ways of Property Division
To very simply list out two different ways of property division:
- By litigation
- By settlement
It is easy to have a litigous mindset when we talk about property division, because relationship has broken down. Have you asked these questions?
- How much can I get from him/her?
- Can he/she get my overseas properties?
- Can he/she get my superannuation?
These questions are reasonable questions to ask. However, it is wiser to talk about property division in a non-litigous way.
We always encourage parties to avoid litigation, and settle the matter outside of court. It will be much cheaper, much quicker, and the result is much more controllable.
The better questions to ask are:
- How much am I willing to get, in order to settle?
- How much is he/she willing to take, in order to settle?
- How can I talk to him/her peacefully to archieve settlement?
- How can my lawyers help me to archieve settlement?
Two ways of Property Settlement
It would be a HUGE step if both parties are willing to settle a family matter, instead of fighting the matter before a judge who doesn’t know your family.
There are 2 ways of Property Settlement under the Family Law Act:
- Binding Financial Agreement
- Consent Order
What is Binding Financial Agreement?
A Binding Financial Agreement is a legal contract entered into by the parties, agreeing in the way they wish to divide their own properties and liability.
Both parties MUST engage a solicitor in order to make a Binding Financial Agreement effective and binding.
A Binding Financial Agreement can be made before, during or after a marriage or de facto relationship.
What is Consent Order?
A Consent Order is, simplistically, an agreement approved by the Court. Since the agreement is endorsed by the Court, the parties agreement eventually becomes a Court order.
It is not necessary for the parties to engage solicitors. However, it is common that they do, because some of the legal procedures ing applying for a consent order can be quite complicated.
What are the pros and cons of a Binding Financial Agreement?
- There is a lot of flexibility in what the parties may agree with;
- It is inexpensive and relatively quick to draft;
- It is relatively easy to be updated and amended according to changes in the parties’ situation;
- It can be made before and during marriage or de facto relationships to “isolate” properties, and quite often used as prenuptial agreements (as known as “prenups”).
- Financial Agreements are not sealed by the Court and have less legal binding power, compared to Consent Orders;
- It is relatively easy to overturn Binding Financial Agreements, compared to Consent Orders;
- It is not uncommon for parties to breach Binding Financial Agreements, and it is relatively difficult to enforce them when compared to Consent Orders;
- Both parties must engage their own solicitors.
What are the advantages and disadvantages of a Consent Order?
- The parties still maintain a lot of control over what they want to agree to;
- Consent Orders are Court Orders, therefore they are a lot more binding;
- It is not essential for the parties to engage legal representatives;
- The Court will consider whether the agreement is ‘just and equitable’.
- It takes time to draft the application and accompanying documents, and it takes time for the Court to consider the application. As a result, Consent Orders take a longer time to obtain;
- As it takes longer to prepare, it is more expensive.