Clients can find property matters in family law mysterious. How are assets actually divided? What are your rights and obligations? There are many misconceptions that mislead people about what to expect. We want to delve into the mystery and tell you the secrets to an effective property settlement agreement.
Key takeaways
Mediation is a crucial part of developing agreement if there’s any disputes.
There are many misconceptions about property settlements we’ve come across.
One of the biggest secrets to a successful settlement is to work well with your lawyer.
Our case study demonstrates the importance of professional legal advice.
What is a property settlement agreement?
Property agreements allow separating couples to divide their assets after separation or divorce. These arrangements are important for married couples and parties in a de facto relationship. There are different ways parties can make financial agreements.
Informal agreement
Some parties form a written agreement without involving the family law system. This can work for simple asset pools. As a positive, informal agreements don’t include legal costs. However, they come with risks. The parties aren’t bound to the property settlement agreement legally. This can lead to challenges later on which will cost implications. The agreement can also result in an unfair division.
Consent orders
Consent orders are legally binding agreements granted by the Family Court. This is the most common way of settling financial matters. The Federal Circuit and Family Court finalised 15,974 consent order applications in the 2022-23 financial year.
Binding financial agreements (BFAs)
BFAs are also legally enforceable agreements. However, they don’t involve the Court. This can give parties greater flexibility. This can be particularly useful for parties with large and complex asset pools. Both parties must receive independent legal advice.
Succeeding in mediation
Some parties can agree to a property settlement agreement with their former partner without assistance. For others, mediation is an important first step. Here are the secrets to successful mediation.
Be prepared
Some people believe that mediation is a free-form process. This isn’t the case. Experienced mediators oversee a structured discussion with clear goals. The purpose of mediation is to develop actionable solutions based on open communication and mutual compromise.
Be creative
Often parties don’t realise what solutions are available. Creative thinking goes a long way. A Massachusetts Institute of Technology study into creativity in mediation found that 65% of agreements contained creative elements that added value for the participants.
Act as a team
In a dispute, it’s hard to think of the other party as anything other than an opponent. Leave those feelings at the door. Mediation is designed to find solutions that both parties can live with. Be willing to see their perspective so everyone’s needs are provided for.
Mediation is always an option
Clients may think that once litigation has begun, they’re locked in to that process. However, the Court will give you the opportunity to return to mediation and secure an agreement instead. At every step, you can turn away from litigation and opt for filing consent orders. It’s in everyone’s best interests for the Family Court to encourage parties to pursue options other than court action.
Common misconceptions
Through our years of practicing family law, we’ve heard a lot of misconceptions about property settlements. Let’s settle some of the most common.
"We'll split the property 50/50"
In reality, it’s rare for asset pools to be split evenly. This reflects the fact that separated couples often have unequal access to financial resources. That’s why each party’s future needs are important. For example, if one party sacrificed their career to care for children, their reduced earning capacity is relevant to the settlement.
"I'm not entitled to any assets since I couldn't contribute financially"
There are many ways to contribute to a marriage other than financially. Non-financial contributions can encompass various activities, whether within financial agreements or an informal agreement. These contributions may still hold weight in a legally binding arrangement, especially in the case of a de facto relationship. They are also considered in family law cases, particularly when determining consent orders, parenting arrangements, or a financial order. These contributions can include:
Keeping the home.
Child raising.
House renovations.
Such contributions are valid grounds for making adjustments to property settlement agreement under family law and may be recognised when formalising consent orders.
"If an asset's in my name, it's mine"
Some clients are confident that if they bought an asset, they’ll retain it. This isn’t true. All assets and liabilities, regardless of who purchased or incurred them, are put in one big pool. Does the fact that you financially contributed to an asset matter? Of course. But that claim is balanced against other contributions and future needs.
"Once a property settlement agreement is finalised, there's no going back"
Financial agreements are meant to be the final say. However, people’s circumstances change. When a party’s circumstances change significantly enough, a review of the agreement may lead to alterations. The significant change in circumstances must make the agreement unfair or impractical. Examples of significant changes include:
Developing a serious illness that affects a party’s ability to work.
A sudden loss of employment.
Entering a new relationship.
An agreement can be set aside if there’s evidence of fraud or unconscionable conduct. This may involve:
Coercing a party to agree to a settlement.
Forcing a spouse to enter an agreement with threats.
Committing fraud by hiding or misrepresenting assets.
Failing to provide a statement confirming that both parties received independent advice before signing.
Entering into a cohabitation agreement under limited circumstances where one party was at a significant disadvantage.
While financial agreements and consent orders are legally binding, courts may adjust them if fairness is significantly affected due to fraud, non-disclosure, or major changes in circumstances.
Working with your lawyer
One of the major secrets to creating a successful financial agreement is to work well with your lawyer. Ensuring the agreement is legally binding and protects your interests requires open communication and careful planning. Whether you are negotiating with a former partner or seeking to formalize arrangements through consent orders, getting the most out of your relationship with your lawyer involves various factors.
Full financial disclosure
Disclosing your finances is the first step in any property agreement. Parties must be open and honest about their financial circumstances, ensuring transparency throughout the process. Family lawyers depend on their clients making a thorough disclosure so that the settlement can proceed smoothly.
This includes providing relevant legal documents that reflect assets, liabilities, and income. Failing to accurately disclose financial information can lead to delays and complications. In only limited circumstances, an ex-partner may challenge a property settlement agreement if full disclosure was not provided.
Accepting legal advice
Parties can approach cases with strong emotions. A client needs to be able to trust their lawyer. If emotions get in the way, they can cloud a client’s judgment. A family lawyer can remain focused on achieving the best realistic outcome, especially when dealing with financial agreements and consent orders.
It’s particularly important that, even when the advice isn’t what the client wants to hear, they remain willing to accept that advice to ensure their financial agreements and consent orders are fair, legally sound, and in their best interest.
Beware of social media
One factor clients often neglect to consider is their social media use. You might not think that social media could affect a family law matter. However, posts can be misinterpreted and derail negotiations, especially if the other party or your ex-partner disagrees with your statements.
In some cases, social media activity can be used as evidence in court to challenge court orders, a financial order, or even prove a major change in circumstances. If the two parties cannot agree, the court may intervene to reassess the situation. To avoid complications, it may be advisable to refrain from using social media while finalising your settlement unless both you and your ex-partner agree on what is shared publicly.
Case study
Here’s a case we worked on that demonstrates the importance of proper case management:
I was very happy with my experience at Shanahan Family Law. Danyelle guided me through the property settlement and a satisfactory outcome was reached. This was achieved without going to mediation or court.
- Robert Johnston
This case demonstrates why you should seek legal advice. The client required guidance to navigate his settlement, including spousal maintenance, proposed consent orders, and property disputes. With the right advice, he received a successful outcome. Crucially, this involved settling his property arrangements amicably without court or mediation.
Conclusion
Property division are a critical part of your post-divorce future. Many clients can find settlements confusing. Without the right advice, they may not get their proper entitlement. We want to discuss the secrets to creating the best possible financial agreement. By making the process less mysterious and addressing misconceptions, we can help you approach property settlement agreement matters confidently.
Worth every dollar. Straight to the point with every effort to get the job done Not to mention how understanding and friendly all the staff. Thank you all for your amazing help.
- Mona Alejandro
Are you dividing your personal property? Let our team help. Contact us today.
