Property Settlements

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Introduction

Property Settlement is the legal phrase for the end result, in monetary and proprietary terms, of your divorce or separation. Participants in this process are often reported as being overwhelmed by technicalities, or outraged by the outcome. But with the help of Heckenberg & Associates and the proper preparation you can avoid undue legal problems.

Preliminaries
Begin by organising your property. There is only a limited window of time within which the court will allow an application for settlement – you must apply after separation, but within 12 months from when the divorce is finalised (through what is called the 'decree absolute').

Organising your property begins with thinking about what actually constitutes "property". Legally, the term is much broader than most people think. As difficult as it sounds, the best approach is to make a list of things owned that can be reduced to a monetary value, and also things of sentimental value. You should consider things that you definitely own alone, things that are definitely jointly owned, and things that are possibly jointly owned. Your considerations should also include superannuation. In December 2002, the law was changed to allow the splitting of superannuation entitlements in property settlements and this has important implications for people now conducting property settlements. This will be considered separately below.

Once your list is complied, the next step is to consider what contributions were made (both monetary and otherwise) to the relationship and what are the future needs of both partners. This second issue requires consideration of many issues. Primarily you should consider your responsibilities towards any children of the relationship, who they might live with and how they will be provided for. Then there are, employment opportunities, pets, whether one or other partner has family to rely on, and the general age and health of each partner.

Superannuation
On 28 December 2002, the law changed with respect to superannuation. Previously, courts could only regard super as a future financial resource of the marriage, which meant that it was an asset that was to be allowed for, rather than property which could be divided in a settlement. Now, courts may make orders or accept agreements regarding dividing superannuation funds. Superannuation is complex enough alone. But when it comes to property settlement, these complexities are magnified because the Court must consider the future value something that grows over time. This requires the application of extremely complex financial formulas. Furthermore, parties have a number of options in relation to super and other lump sum payments that will have very large impact on the tax they pay. By obtaining careful legal and financial advice, you can minimise tax liability by selecting the most appropriate course of action.

Settlement
There are a number of ways to reach a settlement, and courts, judges and lawyers do not have to be involved. However, we recommend that you obtain legal advice at some point in the process to ensure protection of your interests.

Agreement
Agreement can be reached between the parties through a "Terms of Settlement" document which is then approved by the court through Consent Orders. The Family Court seeks to encourage agreement reached independently by the parties. For this reason, at any stage in the process the Court has the power to make orders based on completion by the parties of a Terms of Settlement.

Mediation
Agreement can be reached between the parties using a mediator. These are also approved by the Court through Consent Orders. If you are having difficulty reaching agreement independently, mediation is the next step. Conversations in mediation cannot be used against parties if they later go to a Court hearing – they are confidential – and the mediator can assist in drafting an agreement that will eventually be approved by the Court.

Final Orders
If no agreement can be reached, Final Orders can be sought from the court. If you do start court proceedings, there is facility for conferences between the parties to assist agreement. However, at the end of the day, the Court will make Final Orders if necessary which impose a settlement upon the parties.

Superannuation Orders and Agreements
The Court may make (either final or consent) orders which offset the superannuation against other assets held. Alternatively, the Court may use specific orders.

• Splitting order or Splitting agreement: The court may order, or accept and ratify an agreement, that superannuation be split between the parties in a given proportion.
• Flagging orders or Flagging agreement: Rather than decide the issue immediately, the court may flag, or accept the parties' decision to flag, the issue for consideration when the superannuation amount becomes payable. This allows the Court to delay its orders until the value of the super is known.

Where superannuation is involved, parties should seek expert advise and ensure that all aspects of this complex issue are finalised or flagged upon separation. Superannuation is about protection for the future. Ensuring the best outcome now is the only real way to ensure that today's ill-drafted agreement does not come back to haunt you in years to come.

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