All too often we hear of separating couples wanting to bypass the need to involve lawyers in a property settlement. Instead, couples will often reach their own agreement with their spouse informally and believe that this finalises their financial relationship. While we absolutely encourage separating couples to reach their own agreement, failing to formalise the agreement through the proper legal pathways can be risky.
Without taking that additional step to have your informal agreement formalised by way of a Court Order or through a Financial Agreement, then you do not have any real protection against your former spouse from seeking a further property settlement from you.
Even in circumstances where the initial agreement is written down by the parties, if it is not structured according to the legislative requirements for a Financial Agreement, and the parties have not obtained legal advice as to the nature and effect of the agreement, then there is no legislative requirement for the Court to uphold the terms of the informal agreement. While the Court may give some consideration to the parties’ original agreement and their intention at the time of separation, it is highly unlikely the Court would find an informal agreement binding on the parties.
If your informal property settlement is not upheld and one or both of the separated couple want to commence property settlement proceedings, it then becomes necessary to start the property settlement process from the beginning. In doing so, it is important to consider that:
- One of the parties may end up with assets which they otherwise would not have been entitled to, due to either a diminished or greater asset pool.
- Any assets or liabilities disposed of or acquired since separation will be considered and, potentially, included in the asset pool available for distribution;
- Your assets and liabilities are valued as at the date of negotiations or trial, not as at the date of separation;
- Your current circumstances and future needs may be affected by whether you have re-partnered or now have young children, your current age and health. This can significantly sway, either way, the assets which you may be entitled to from the property pool and this could be substantially different to your entitlement at separation.
Under the Family Law Act, there are two ways of formally documenting a property settlement – an Order of the Court or through a Financial Agreement.
Court Orders and Financial Agreements can simply reflect the informal agreement which the separated couple has reached, however it is the manner in which they are drafted and settled which provide that additional security for you to know that your former partner cannot come back for a second bite of the pie.
If you are currently separating or have already separated and reached an informal agreement with your former partner, come and speak with one of our experienced family lawyers to ensure that your property interests are secure.
Tiyce & Lawyers – we’re here when you need us.
