Avoid these 6 Divorce Property settlement red flags

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6 Property settlement red flags you should avoid

Whether you are in the process of a divorce, or ending a de facto relationship, finalising a property settlement is one of the most complex issues you will face. As such, there are many mistakes that people make when entering into one.


The family law courts treat de facto couples in much the same way as a married couple, so regardless of your relationship status, you will want to avoid these pitfalls.

1. Not getting legal advice before a negotiation

You may not feel that you need the advice of a family lawyer when discussing property matters with your former partner. After all, if you can come to an agreement on your own, it probably seems like an unnecessary expense. However, property rights under the family law act can be a tricky area to handle.

Consider this: financial assets go beyond the cash in your bank accounts. It’s likely you both have superannuation interests, which means potentially looking into superannuation splitting laws. If you have set up a self-managed super fund, disentangling your respective interests becomes even more complicated.


Are you able to determine what will become of the family home? You may think that if only one spouse’s name is on the title, it therefore belongs to them. But, this couldn’t be further from the truth. In reality, neither party can be forced to leave the home without a court order.

If you want to make sure your rights and interests are protected, you should always seek legal advice before a financial agreement is reached. We should point out seeking legal advice doesn’t always have to expensive legal fees.  In fact this can be far from the truth. We understand in some cases this might not be the case.

2. Not knowing the value of the asset pool

If you are going to come to an agreement that is fair and reasonable for the both of you, you need to have a good understanding of the value of the property pool you’re dealing with. That doesn’t just include adding together all the property you both have ownership of. You also need to evaluate the debts and liabilities associated with the relationship to find the net asset pool.

Intangible assets also need to be considered. For example, if you own a business, does it have significant goodwill, and how will it be calculated? In this day and age, newly conceived asset types like cryptocurrencies must also be accounted for, and calculating their value can be extremely difficult due to their wildly fluctuating nature.


If you don’t have a good grasp on the value of the marital pool of assets, it is very difficult, if not impossible, to have any reasonable expectation that you can recover your fair share. Getting independent legal advice from a a lawyer experienced in family law, and a good accountant, can make this much easier.

3. Not understanding what assets are included

De facto relationship

Some people are under the impression that assets acquired prior to entering a de facto relationship or marriage are not subject to a property settlement, when in fact they are. Any assets owned by you or the other party, whether you came into possession of them before or during the relationship, will count towards the overall asset pool.


It is even the case that property you acquired after a separation will be up for grabs. It is only once a final divorce order is granted that new assets will be beyond the scope of a property settlement. In the case of a de facto relationship, a settlement can be sought up to two years after separation if:

  • The relationship itself lasted at least two years;
  • You have children together;
  • The claimant made significant contributions to the property of the other party.

4. Not drawing up a contract properly

It is a big mistake not to have any written agreement. An oral agreement may seem easier, but written agreements give you a much firmer understanding of the terms to which you’re agreeing.

The benefit of a written document over an oral understanding is, not only does it provide certainty to both parties as to what they are agreeing to, but it also gives you the option to have it become a binding financial agreement. Without legal formalisation, any disputes that arise in the future will likely need to be resolved through court proceedings.

Once the family court steps in to hand down property orders, you may find yourself in a much less favourable position. However, with a suitable contract in place that satisfies the family court, you can have greater control over what you receive in the settlement.


Depending on how you’re handling the property settlement, a contract detailing its terms may need to adhere to very exacting rules regarding what information is included, and what language is used. If you are looking to secure consent orders, the court will apply a four step process to ensure that the settlement is just and equitable to both parties. If the court feels your proposed property settlement fails to meet this criteria, your application for a consent order will be rejected.

5. Accepting less than what is just and equitable

Non financial contributions

It’s not uncommon for a party to a property settlement to jeopardise their financial circumstances by agreeing to a grossly unfair division of property. This can happen for a number of reasons, including:

  • Not receiving legal advice to properly understand your rights, and whether a property settlement is in your best interests (refer to point 1);
  • Not having taken the time to accurately assess the value of the property being dealt with (refer to point 2);
  • They just don’t want to have to deal with the legalities of removing themselves from a relationship, and just want the whole thing to be over, and so accept the bare minimum;
  • They are unaware of assets being hidden by their former partner;
  • Not confronting their ex-spouse about asset wastage;
  • Not fully appreciating factors such as non-financial contributions to a relationship.

While we understand that going through a divorce is already an emotionally traumatic time, you will come to regret not standing up for what is rightfully yours over time. So, it is well worth investing in a family lawyer to provide legal advice so know where you stand legally and financially, so you can divide property fairly.

The issue of hiding or intentionally dissipating assets is often overlooked, but can play a big role in denying you your rightful share of the assets. It can be difficult to uncover these activities, but with the help of a forensic accountant, you can significantly increase your standing in property settlements.


6. Not thinking long term about life after divorce

When there are children involved, financial agreements can be made even more complicated. There are many things that need to be thought about with respect to the future needs of a child under the age of 18; things like:

  • Education;
  • medical needs;
  • Basic living expenses;
  • Extra-curricular activities;

You need to think carefully about the long term implications of all of these concerns when organising matters related to child support. It is important, then, to think carefully about child custody arrangements when entering a financial agreement. While you can apply for child support at any time prior to your child turning 18, It is often easier to organise it at the same time as your property settlement.

Depending on the financial resources and earning capacity of you and your ex-partner, it may be necessary for you to pay spousal maintenance if you are not taking on the role of primary carer to your child. Your equal parental responsibility doesn’t end when you get divorced, and supporting your partner in their role as the primary caregiver will be expected.

These are some of the most common mistakes people make when approaching a property settlement, but there are many more. Creating a settlement that is fair to both sides depends greatly on your individual circumstances, and talking to an experienced divorce lawyer such as those here at Shanahan Family Law is extremely important.

Extra Property Settlement Learning Resources

Learn more here on property consent orders or contact us today to organise an initial consultation.

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