Property Disputes & Spousal Maintenance
Settling property disputes and spousal maintenance when relationships break down
Laws that apply to property settlements and spousal maintenance are governed by the Family Law Act 1975 in all Australian States and Territories, except for Western Australia. Whether you are separating from your spouse, or your de facto partner, you will likely have to go through a property settlement.
There is no set formula as to how property is to be divided when a relationship breaks down. It is often assumed that each party is automatically entitled to 50% of all assets, including the division of the family home, furniture, motor vehicles, investments, and superannuation. However, this is not always the case. The courts outline a four-step process that must be followed when assessing a property settlement.
We’re here to help you negotiate in an effective way with your former spouse to ensure a fair outcome can be reached for all parties.
In addition to property settlements, spousal maintenance may also be required when one partner is unable to adequately support themselves and the other partner has the financial capacity to provide that support.
In considering if spousal maintenance is required, and how much should be paid, the court will consider the “reasonable” weekly needs of each party and if after allowance for such “reasonable” weekly needs, there remains the capacity to pay support to the party who requires financial assistance.
Spousal Maintenance Orders can be made on an urgent basis, to deal with short-term financial support pending finalisation of property settlement matters, and also on a final basis, to extend past the final judgment and to enable the financially dependent party to have the time they need to upskill and re-enter the workforce, or otherwise invest funds to find a method to financially support themselves.
Our experienced team provide practical legal advice regarding claims for spousal maintenance and the division of property. It is important you seek trusted advice as soon as possible after separating from your partner to determine your rights and obligations.
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The four-step process to assessing a property settlement:
Evaluate the contributions made by each party to the marriage/de facto relationship. There are three types of contribution categories considered:
- Financial contributions such as receiving wages and bringing assets into the relationship;
- Non-financial contributions such as conducting renovations, doing the accounting for a family business, etc.;
- Contribution to the welfare of the family, such as a parent or homemaker.
Assess the future economic needs of each party. These relevant factors can include the age and health of each party, which party has the care and control of any children of the relationship under 18 years of age, any disparity in income and earning capacity, and payment of child support.
Review the proposed division of assets to ensure it is just and equitable. At this stage the court will consider any further adjustments necessary to ensure that a fair settlement is achieved.
For married couples who have separated, they can apply for, or negotiate a property settlement with their spouse immediately. You do not need to wait for divorce to be finalised. Prior to divorce, you will not be restricted by any time limitations.
For parties who have divorced but not yet resolved property matters, it is important to be aware that court proceedings need to be commenced with 12 months of the date of divorce (i.e. the date the divorce order takes effect).
For de facto couples, so long as the relationship qualifies as a ‘de facto relationship’ under the Family Law Act and the couple have been together for a total period of at least 2 years, then parties in de facto relationships can commence court proceedings for a property settlement from the time they separate until two years after separation.
If you separate from your partner and put an informal agreement in place without obtaining legal advice, the odds are it is not going to be legally binding under the Family Law Act.
By formalising your property settlement in a legally binding way, you bring your former partner or spouse’s property settlement rights to an end. You can have peace of mind that your former partner cannot come back in the future seeking further support or assets.
By formalising a property settlement under the Family Law Act, tax benefits can arise for spouses transferring property to each other as part of the division of their asset pool. Where one spouse transfers their interest in the family home or an investment property to the other pursuant to a Court Order or a Binding Financial Agreement, the transfer will not trigger a Capital Gains Tax (CGT) event and the transfer will be exempt from any State Government stamp duty.
Superannuation falls within the definition of ‘property’ under the Family Law Act 1975 (Cth). This means all superannuation will be included in the asset pool. However, the court will consider the superannuation each spouse brought into the relationship and the other contributions made by both parties when dividing up the asset pool.
Reasonable weekly needs vary from case to case and will take into account your individual circumstances. They can include:
- Rent or mortgage payments;
- Car loan repayments;
- Petrol and car expenses;
- Insurances such as house, health and car insurance;
- Medical costs, including pharmaceuticals;
- Telephone and internet costs;
- Household utilities such as electricity, gas and water;
- Children’s entertainment expenses;
- Household maintenance costs.
It is important that you are realistic in making a claim for spousal maintenance and remember that it is a claim for support for your “needs” not your “desires”.
If you cannot reach an agreement with your former spouse in regard to spousal maintenance, you can file an application in the Federal Circuit Court seeking spousal maintenance orders. You will need to set out your income and expenses in a Financial Statement when you make an application and your spouse will need to do the same when they file a response.
Our family law team can assist you with preparing your application or responding to an application to ensure your interests are protected and your matter can proceed smoothly.
In order to establish what your income is, you need to provide copies of your payslips (if applicable), contract of employment, Centrelink statements and any document which evidences money or “saleable” assets that you hold, such as bank statements, share certificates, etc.
You will then need to provide evidence or tax invoices of your weekly expenses, or bank statements to show direct debits and payments made for these expenses.
For anyone who is divorced, you have 12 months from the date of your divorce to apply for spousal maintenance. For de facto relationships, you have two years from the date of final separation to make an application for spousal maintenance.
If you do not make your application within these time limits, you can seek special permission from the court to file an application out of time. However, this may not be granted unless you have a very good reason for failing to file your application within the time limit.