Splitting property and money during divorce
When you get divorced, you and your husband or wife will have to split up all your property and money.
You can sort this out yourselves but if you can’t agree, a court will need to decide for you.
This is handled by either the Family Court of Australia or Federal Circuit Court of Australia for both married and de facto couples, except in Western Australia, where de facto couples need to use the Family Court of Western Australia.
What does property and finance include?
If you’re going through a divorce, you must tell each other and the court about all your property and finances.
Property and finances include:
- the family home
- cars, household contents and other personal property
- money in banks, building societies, credit unions and other financial institutions
- investments in real estate
- interests in businesses, shares in companies and life insurance policies
When you agree on how to split property and money
If you and your former partner agree on how to split your property and money, it can be a good idea to formalise your agreement and make it legally binding. You can do this by applying for a consent order or making a binding financial agreement.
A consent order is when you put your agreement into a legal document and ask the appropriate court to make it official.
The court will make a consent order only if it thinks that your agreement is properly written and fair.
Financial agreements (prenuptial agreements)
You can make a binding, legally enforceable agreement about what will happen to your financial arrangements if your marriage breaks down. These agreements are often called prenuptial agreements, but the correct legal term is financial agreements.
You can make a financial agreement before, during or after a marriage. For a financial agreement to be legally binding, both you and your partner must get independent legal advice and you must both sign the agreement.
Financial agreements can cover financial settlement (including superannuation entitlements) and financial support (maintenance) of one spouse or the other after your relationship ends.
The court can say that your financial agreement is invalid if you didn’t get independent advice or the agreement involves fraud – for example, if one of you didn’t tell the other everything about your property and finances.
When you can’t agree on how to split property and money
If you and your husband or wife can’t agree on how to split your property and money, you have to get the appropriate court to decide for you. This is called applying for a financial order.
It’s often cheaper and quicker to have matters like this dealt with by the Federal Circuit Court. The Family Court tends to handle more complex matters.
There are two types of financial orders:
- Property order: this deals with the division of property, income and other financial resources.
- Spousal maintenance order: this deals with financial support of husbands, wives, former husbands and former wives.
When you apply for a financial order, you go through several steps.
Step 1: procedural directions
This means asking the court what needs to happen next. For example, the court might say you have to hand over all your financial documents.
Step 2: conciliation
This involves mediation, which is a discussion with a court official called a registrar. The idea is that the registrar tries to help you and your husband or wife agree.
Step 3: further mediation
If you still can’t agree, the court will set up further mediation for you.
Step 4: court hearing
If you’ve been through all these steps and you still can’t agree, the court will have to decide for you. This is called a court hearing.
The court will look at the facts of your individual case when it decides. There is no formula or standard division of property and money, so different families get different decisions.
When making a decision, the court takes the following general principles into account:
- what you have and what you owe
- how much money and other financial contributions – like income or inheritances – you’ve each put into the marriage
- what non-financial contributions you’ve put in, including caring for children and looking after your home
- what you need for the future – for example, to look after children or care for your own health
- what you might earn in the future.
The court needs to agree that the financial order is fair.
Enforcement of consent orders or financial orders
You can enforce a consent order, financial order or financial agreement by using the Family Law Act. It’s best to get legal advice. Your lawyer can write to your former partner to try to get them to abide by the order or agreement. If that doesn’t work, your lawyer can issue enforcement proceedings in court.
Under the Family Law Act, you have a responsibility to financially support your husband or wife after divorce if your husband or wife can’t meet daily living expenses from their own resources and you can help meet those expenses. This is called spousal maintenance.
You don’t automatically get or have to pay spousal maintenance. You and your former partner can formalise any payments that you agree on by putting the details into a consent order or financial agreement. If a court is deciding on spousal maintenance, it looks at what you both need, as well as several other things, including:
- how old and how well you are
- how much you earn and owe, and your other financial resources
- how much you can work
- whether the relationship has affected your ability to earn income.
You must apply for spousal maintenance within 12 months of a divorce becoming final. After this time, the court will decide whether you’re allowed to apply for spousal maintenance.