Like with many aspects of a marriage or partnership breakdown, your financial separation can be confusing. Something which isn’t helped by the many myths and assumptions that surround it. When it comes to dividing your assets, the very first thing you need to do is get the facts.
The below points reveal the actuality around some of the most misinformed areas of your financial separation process.
Financial separation facts you need to know
You don’t need a lawyer to financially separate
If you and your ex-partner are able to reach agreement about parenting arrangements and / or your financial settlement and want to formalise your agreement and make it legally binding, you can jointly apply to the Family Court of Australia (“Family Court”) for consent orders, and can choose to do so without engaging a lawyer.
The Family Court has to be satisfied that the agreement is just and equitable and / or in the best interests of the child/ren before they can make a consent order.
Similarly, you can apply to the Federal Court for a divorce, either jointly with your ex-partner or on your own, and can do so without a lawyer.
It doesn’t matter whose name assets are in
It doesn’t matter in whose name assets are owned or debts are owed. Any assets owned or debts due by either party are assets and liabilities of the relationship; and all need to be considered and disclosed to the Family Court in a financial settlement.
All contributions are valued when dividing assets
All contributions made to the relationship or marriage are valued. The Family Court of Australia categories contributions as:
- Financial contributions
- Non-financial contributions
- Contributions as homemaker or parent
Superannuation can be split during a financial settlement
Each party’s superannuation balance is an asset, which needs to be disclosed and considered in a financial settlement.
Superannuation balances can be split and a portion transferred to the other party as part of a financial settlement, but superannuation must stay in the superannuation environment. For example, a husband can transfer a portion of his super to his wife as part of their property settlement, but his wife cannot then withdraw her super balance in cash to use to fund a property purchase.
These superannuation splitting laws apply to married or de facto couples in all States and Territories of Australia, with the exception of de facto couples in Western Australia.
Current value of all assets and liabilities is required
The assets of the relationship are split when the financial settlement is completed. This can be a long time after the actual separation. Therefore, it is important that the assets of the relationship are protected and preserved until the financial separation process is completed.
The net asset pool must be valued as at the time when the financial settlement is lodged with the Family Court.
The assets and liabilities of each of the parties must be listed in the Application for Consent Orders at their current market value, being the market value at the time the application is lodged with the Family Court.
Often couples are prepared to declare what the value of their assets and liabilities were at their separation date, but do not wish to disclose their current financial position (as at the date when their application is completed and lodged). However, the Family Court requires current market value to be used, together with full and frank disclosure, so there is no getting around this. It is therefore advisable for couples to finalise their financial settlement as soon as is practicable after separation.