Property Settlement Process in Divorce in Australia

After my personal experience and information gathered from various sources, I thought listing them out will be a useful source of information for someone in need too. SO, here I list four crucial steps that comprise in property settlement, irrespective of whether the couple have prepared a financial agreement or have applied to the court for property division.

The Family Law Act suggests the partners as well as the courts, to follow the below guidelines while dividing property and finances after separation.

  • Form Matrimonial Asset Pool


The matrimonial or marriage asset pool comprises of assets and debts brought into the marriage or acquired during the relationship. Any financial possessions whether owned directly or indirectly by both or either of the partners must be considered while listing the assets in the pool.

By assets, I mean: business entity, investments-shares, bank balance, fixed deposits, inheritances, jewellery, profits from business entities owned by either or both the spouses, automobiles, furniture, superannuation, estate, family residence etc.

By no means, only assets are considered in marriage asset pool. Debts are included too.

Debts may be : expenses, bills, loans, mortgages, credit card balance, bank overdraft, tax liability etc.

Net asset pool that is available for division is arrived at with this formula:

Net asset pool = Total assets- total liabilities.

  1. Weigh Contributions

The family court considers various contributions made to the household by both the partners during and after the relationship. The court weighs the contributions before deciding the ration of division of assets between the partners.

Other non-financial contribution: If you or your partner has put time and efforts in maintaining a property, or a business it is considered under non-financial contribution. The court calculates how much money a third party would have charged if hired for doing the same job while weighing the contribution.

Parental contribution: Parenting the child full time and taking care of their needs and other activities form equally important aspect of contribution done by a stay-at-home mum or stay-at-home dad. Note this!!

Homemaker contribution:  Non-financial contributions by you and your partner, or who stays at home to take care of the household is called homemaker contribution. Household chores like cooking, cleaning, washing, doing the laundry are considered as equal contributions like financial contribution. It is no less than direct financial contribution in any way.

Direct Financial contribution: Any direct financial contributions by either or both the partners are considered during settlement process. Direct financial contributions can be monthly income, periodical payouts, capital gains, inheritances etc.

  1. Evaluate future requirements

The family court takes into serious considerations the future financial requirements of the partners. The factors are age, medical condition, duration of relationship, cost of living, current lifestyle, dependents to take care such as children below 18 years of age etc.

  1. Fair and unbiassed

A final and most important thing a court considers is if the financial and property settlement equation is fair to both the parties and is impartial.

If the court finds the property settlement arrangement by way of financial agreement is not fair and equitable and finds discrepancies in the agreement, it can overlook the financial agreement and hold back the Consent Orders.


Circumstances under which a financial agreement gets cancelled by the court:

There are few circumstances when a financial agreement lacks credibility in the eyes of the court and risks beings cancelled. Such instances are:

Interest on Superannuation: If the couple have a clause in the financial agreement that they will share the interest accrued on superannuation. Since there is no legal provision for the such an arrangement, the financial agreement is overlooked by the court.

Changed life situations: If the life circumstances of the family has changed significantly after the financial agreement is drawn, the court automatically withholds the implementation of the financial agreement.

Guidelines are not met: If the financial agreement is not prepared on the guidelines of the family law act regarding finance and property settlement after separation, then the financial agreement is not enforceable.

Unfair to any of the partner: If the financial agreement is unfair to any of the partner by putting that person in miserable condition, the court cancels the financial agreement.

Creditor’s interests: If the financial agreement cheats the creditor’s interest, it does not gain court’s approval.

Fraud: If the court feels the purpose of drawing a financial agreement is to deceive another party, the financial agreement is set aside by the court and a fresh property settlement arrangement is made considering the earlier stated four factors.

The video below shows how property settlements are addressed during a relationship breakdown:


Types of Financial Agreements and How to Prepare Them

You can check in my other post, how financial agreements can help sort finances, if unfortunately, things don’t work out between you and your partner.

Financial Agreements are legally binding on both the spouses for enforcement. The financial agreements can be made before, during or after the start of a relationship. It includes everything a household has as assets, estates, finances and inheritances.

Types of Financial Agreements

    • Prenuptial Agreement: This financial agreement is made before a relationship begins, which states what comprises in the matrimonial asset pool if the couple think of separating in future.
    • Postnuptial Agreement: This financial agreement is made after the relationship commences and comprise of current and future financial arrangements between the couple.
    • Cohabitation Agreement: Cohabitation Agreement is done between the couple when they are entering a relationship of living together. This agreement mentions about the couple’s intention and contribution to the joint assets of the household.
    • Separation Agreement: The separation agreement is done between the couple while separating from the relationship. Separation agreements are useful to set the guidelines on how to split and manage finances separately.
  • Divorce Agreement: The divorce agreements are drawn when couples decide to divorce. The couple need not wait for the divorce proceedings to begin to prepare an agreement. Similar to the separation agreement is contains how finances are to be handled during and post-divorce.



What do Financial Agreements Cover?


Financial agreements cover gamut of financial issues to smoothen the transition from separation to divorce independent living of both the partners. Financial agreements if done in good faith and sensibly, can ensure a stable financial life to both the partners. I wish, someone told me this before!

A financial agreement, generally, covers priority issues of a family. Such as:

  • How child support and other child care expenses are to be met
  • How matrimonial assets are divided in a fair way
  • Assessing future needs of both the partners and providing for the same
  • Spousal maintenance if any, is to be mentioned
  • How inheritances, antiques, gifts brought in by both the partners are to be treated
  • How any other expenses are to be met by both the partners
  • How and when superannuation should be shared


Process of Preparing Financial Agreements


Financial agreements are to be prepared with utmost care and discretion to make it a fair deal to both the partners. If financial agreements don’t meet the guidelines set by the Family Law Act, then it cannot be applied for gaining Consent Orders from the court to make it enforceable.

A step-wise guide on how prepare financial agreement:

Step 1: As mentioned above the partners must draw their current and future financial needs as accurate as possible and agree on terms of sharing the assets and debts, mutually.

Step 2: If the couple cannot agree on amicable terms to share the finances and properties, they can take the assistance of mediators or collaborative lawyers to find a common ground to discuss how properties can be divided fairly.

Step 3: The agreement must be prepared under expert legal guidance of two independent family lawyers, who advice both the partners on benefits and drawbacks of entering such an agreement. After which, they sign the agreement.

Step 4: Only after completely understanding the consequences of getting into a financial agreement and agreeing to it, the partners must sign the agreement.

Once the partners sign the agreement, it becomes legally binding. The family court can grant Consent Orders after looking over at the financial agreement. The Consent Orders are orders from the court directing the parties to carry out the financial agreement.

After signing the financial agreement, none of the partners can apply to court for its mediation to settle the finances and property division for them.

Termination of Financial Agreement


If you wish to end the agreement, it is easy too. A financial Agreement can be terminated as and when deemed required by both the parties on mutual basis.

A new agreement can be drafted provisioning the termination of the old agreement.

A document, in writing can be signed stating the old financial agreement stands cancelled.

Both the parties should get independent legal advice from family lawyers to understand the consequences of cancelling the old financial agreement and getting into a new one. A letter from the legal advisors must be attached with the new financial agreement.

Check out the video, explaining financial agreements:


Assets and Debts sharing in Divorce in Australia

The very first question that arises in the minds of partners ( as it did when I was on the edge!)  when separating is what constitutes assets and how it is shared between them. Another side of the question, the partners generally, miss out, is to understand that debts too are included in division and are to be shared by the partners.

Matrimonial Assets


Here, I have tried to list out as much assets as possible that figure in property sharing during divorce. These make the Matrimonial Asset Pool for division between the partners:

  • Family home
  • Investments
  • Bonus payouts on investments
  • Furniture
  • Motor Vehicles
  • Insurance policy
  • Antiques
  • Superannuation
  • Family business entity

Investments– Real estates, shares and debentures form investments, that are added to assets pool for sharing.

Family home– Either of the partners can prefer to live in the family residence or wish to sell the family home and add the sale proceedings to matrimonial asset pool for division.

A family business entity– It can be a trust, a sole proprietorship, or a partnership enterprise. A partner can choose to walk out of the business enterprise by settling his/her stake with a lump sum amount or retain the stake and remain in the entity.

Superannuation– Superannuation is a retirement plan for Australian citizens, an initiative governed by the Australian Federal Government. Superannuation cannot be easily claimed by either of the partners. It is released only in extraordinary circumstances such as financial breakdown, fatal illness or similar distress situations.

Don’t miss out on debts! The debts are an important part of the settlement too. They can be, any or all of the following:

  • Bank overdrafts
  • Tax liabilities
  • Credit card dues
  • Mortgages
  • Personal loans
  • Home loans
  • Any other kind of liability like utility bills or other household expenses



A little legal details here, just for quick reference: The property settlement laws, of Australian Family Law of 1975, clarifies how the property settlements are done legally. The family court considers the contributions made by each partner to their domestic life and how significant were they to the household and living of the family. Such as:

  • Financial Contributions: Examples: salary or any other form of income and/or asset contribution to the household in the form of inheritances or gifts.
  • Non-financial Contributions: Examples: Taking care of estate, children, home, helping children with homework and other academic and non-academic activities.

Other than the contributions made by the partners, the family court of Australia also considers the below mentioned factors to arrive at as non-arbitrary division of assets ratio as possible.

They are:

  • Employability of each partner: education qualification, age and employable skills etc.
  • Valuation of assets as per the current market scenario
  • Future financial commitments: medical condition and treatment, child support, child care, providing for a dependent etc.

If a spouse prefers periodical payouts as spousal maintenance, instead of full settlement, the same can be applied to family court and orders can be obtained.

Either financial settlement or spousal maintenance, whatever you are seeking, it must be done within a year of official divorce order or within two years of separation from your partner in de facto relationship.

A video clip below explains the financial and property settlement in Australia:


inancial agreements are practical alternative to financial settlement orders that are issued by court. Financial agreements are done with consent by both the partners on amicable terms. Consent Orders from court must be applied for, to bring the agreement to implementation.