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When a marriage or de facto relationship ends, one of the most critical—and often complicated—issues to resolve is the division of property. While many couples assume that property settlement can only happen after divorce, the reality is that property settlement before divorce is not only possible but can also be highly beneficial. In this blog, we’ll explore why property settlement before divorce is worth considering, how the process works, and what steps you should take to protect your interests.

What Is Property Settlement?

Property settlement refers to the legal process of dividing assets and liabilities between separating partners. This includes real estate, bank accounts, vehicles, superannuation, investments, business interests, and even debts. The goal is to reach a fair and equitable distribution based on the unique circumstances of the relationship.

Can You Legally Settle Property Before Divorce?

Yes, under Australian family law, couples can finalise their property settlement before divorce. In fact, many choose to do so because it simplifies the divorce process later on. For married couples, the law allows property matters to be settled at any point after separation and even before filing for divorce. For de facto couples, the property settlement must generally be completed within two years of separation.

Why Settle Property Before Divorce?

There are several advantages to resolving property matters early:

1. Reduced Stress: Finalising property matters early can reduce emotional stress and uncertainty.
2. Faster Divorce: Once property issues are resolved, the divorce process becomes more straightforward and less contentious.
3. Financial Clarity: Early property settlement provides both parties with clarity on their financial standing, which is essential when planning for the future.
4. Avoiding the 12-Month Time Limit: After divorce is granted, you have only 12 months to initiate property proceedings. Settling before divorce avoids this deadline pressure.
5. Protecting Assets: Early settlement can help prevent the depletion or concealment of assets during a prolonged divorce process.

How Is Property Settlement Determined?

The Family Law Act 1975 outlines a four-step process used by the courts to determine a fair division:

1. Identify and Value Assets and Liabilities: This includes all property, debts, superannuation, and financial resources owned by both parties.
2. Assess Contributions: The court considers both financial contributions (e.g. income, property brought into the relationship) and non-financial contributions (e.g. homemaking, parenting).
3. Consider Future Needs: Factors such as age, health, earning capacity, and child care responsibilities are considered.
4. Ensure Fairness: The proposed settlement must be just and equitable to both parties.

However, you don’t have to go to court. Most property settlements are negotiated between parties with the help of family lawyers or through mediation. Once an agreement is reached, it can be formalised via Consent Orders or a Binding Financial Agreement (BFA).

Consent Orders Vs Binding Financial Agreement

• Consent Orders: These are approved by the Family Court and carry the same weight as a court judgment. They are enforceable and typically considered more secure.
• Binding Financial Agreement (BFA): A private legal contract between parties. Both parties must receive independent legal advice for the BFA to be legally binding.

Common Pitfalls to Avoid

When pursuing a property settlement before divorce, it’s crucial to:

• Avoid Informal Agreements: Verbal or handwritten agreements are not legally binding and may lead to disputes down the track.
• Disclose All Assets: Full and frank disclosure of financial assets is mandatory. Concealing assets can lead to legal penalties and overturning of agreements.
• Get Legal Advice: Property law is complex, and independent legal advice ensures your rights are protected.
• Don’t Delay: Waiting too long to address property matters can lead to asset dissipation or missed legal deadlines.

Final Thoughts

Choosing to proceed with property settlement before divorce is a proactive step that can reduce stress, prevent future disputes, and allow both parties to move forward with financial certainty. Whether you’re considering separation or are already living apart, seeking legal advice early can help you navigate the process efficiently and fairly.

At Daykin Family Law, our family law experts specialise in helping clients across Australia with property settlements before divorce. We offer personalised legal advice tailored to your unique circumstances, ensuring you achieve the best possible outcome.

Contact us today to book a confidential consultation and take control of your financial future.