But we already did our property settlement? Why you should formalise it.
If you have separated and are yet to formalise your property settlement with your ex partner, you should do so without delay, by way of a consent order filed in the Family Court of Australia.
It is important to legally formalise your property settlement agreement for two reasons:
- It makes the deal legally binding so your ex partner can’t back out of it at a later date;
Making an agreement legally binding ensures you get what was agreed and there will be legal ramifications if your ex does not follow through with the deal.
- It protects you in the future from a claim by your ex partner in relation to your current and future acquired assets.
It is important to be aware that any oral agreement or even a written one signed by you and your ex partner in front of a justice of the peace which sets out the division of your assets, has no legal effect. Therefore, it is vital for you and your ex partner to legally cut your financial ties by signing a consent order, so that you can move on with your life without potential litigation hanging over your head. Say you broker a deal with your ex partner amicably after separation and the deal is honoured by you handing over an asset or a sum of cash to them, what’s to stop your ex partner from coming back and making a claim over another piece of your asset pool at a later date? Your increased superannuation, your new house, that new car you have purchased, all of it will fall under the umbrella of the pool of assets that your ex can potentially make a claim from, if you fail to legally formalise your property settlement.
Is there a minimum time limit you have to wait before formalising your property settlement
No. You can do your property settlement as soon as you want after separation. However, it may be wise to take some time to emotionally adjust to the separation prior to formalising division of your assets.
What is the maximum time limit to commence proceedings to formalise your property settlement?
The critical time limits are as follow:
- If you are married – 1 year after your divorce becomes final;
- If you are in a de facto relationship – 2 years after separation.
These time periods are the time limit that a court can accept an application to the court for property settlement orders or issue an order based on an application for consent orders if you reach an agreement on your property settlement.
After the tie limitation period has lapsed, a person cannot commence proceedings without permission (leave) of the court.
If you are negotiating with your ex partner and you have not reached an agreement with them, you need to commence court proceedings within the time limitation period to stop the clock and preserve your rights, or you may lose your right to pursue a property settlement. Settlement is still possible after court proceedings have been commenced. The court will happily make orders at any time during the proceedings.
If you are married, we recommend not filing your application for divorce until you have agreed on your property settlement as otherwise the clock will start ticking for you to reach an agreement within 1 year of the divorce.
What if the time limitation to formalise your property settlement has lapsed?
The Court has discretion to grant a person permission (leave) to commence proceedings outside of the time limitation if they can prove that hardship would be caused if they are prevented from making a claim outside of the limitation period.
The three main elements the applicant will need to establish are:
- a Prima facie case (that is, a case that is likely to be successful on face value);
- The denial of the claim would cause the applicant hardship;
- An adequate explanation of the delay.
Whilst all three elements are relevant, it may be that the hardship likely to be suffered outweighs any inadequate reasons for the delay.
If the above is proved, the court will look at whether there would be any prejudice suffered by the Respondent if leave were granted.
In determining whether a party would suffer hardship if leave were not granted, the court will consider the history of the proceedings, the conduct of the parties and the nature of the litigation and its consequences to the parties if the application is granted or refused, and fundamentally, whether granting the application will do justice to the parties.
Our advice: formalise your property settlement
We recommend that you seek legal advice promptly after separation to legally formalise any agreement reached with your ex partner, to ensure you are not caught outside of the legal time limits.
Are you divorced or have you been separated from your partner for a long time and are yet to resolve your property matters?
If yes, it is extremely important that you seek legal advice as to your ability to commence court proceedings out of time.
The longer you wait, the more you prejudice your right to litigate.
For more information, contact us today and book a reduced rate initial consultation with one of our family law experts to have a confidential discussion about your specific circumstances.