When a relationship ends, the former partners need to divide their property and resources between them to be able to go forward with their separate lives. It may be necessary to sell property and get the cash value to make the division possible. Agreeing on what is a fair division of property and financial resources may not be an easy task for a separating couple.
There is no law that says people have to divide up their property in any particular way. People can choose to divide it 50/50 or 90/10 or even give it all to a man down the road if they wish. If they can’t come to an agreement about what should happen privately, or with the help of lawyers or a dispute resolution practitioner, they may need to approach a court to make the decision for them. If the couple comes to the family law system, the courts will use the method set out in the Family Law Act to work out who should get what. See How the court decides property and financial issues.
De facto couples and property
Since 2008, separating de facto couples (including same-sex couples) who satisfy the eligibility criteria in the Family Law Act have access to almost identical provisions about property distribution and financial matters as do married couples.
The basic definition of a de facto relationship under the Act is simple: it is a relationship where the parties are not legally married, and not related, but have a couple relationship and live together on a ‘genuine domestic basis’. To determine whether this ‘genuine domestic basis’ exists, the court will consider:
- the length of the relationship;
- the nature and extent of the joint life;
- whether there was a sexual relationship;
- financial and property arrangements;
- mutual commitment to a shared life;
- whether the relationship is ‘registered’;
- the care and support of children; and
- public aspects of the relationship.
(See sub-section 4AA(2) of the Act.)
The rest of the eligibility criteria for de facto partners applying for property orders under the Family Law Act may be summarised as follows:
Geographical – An applicant needs to be able to prove one of a set of particular current, or past, connections to a state or territory of Australia (other than Western Australia).
Timing – Unless hardship circumstances exist, de facto parties usually need to make their application under the Family Law Act within two years of their separation.
Other ‘gateway’ factors – At least one of the following must apply:
- the relationship has lasted at least two years; OR
- the parties had a child; OR
- the party applying made ‘substantial contributions’ to the relationship; OR
- ‘a serious injustice’ would result if the court did not allow the application; OR
- the relationship is registered under State or Territory law.
If a couple does not meet the eligibility requirements for coverage under the de facto provision of the Commonwealth’s Family Law Act, they may still be eligible to apply for property distribution orders under the broader ‘domestic relationships’ schemes that apply in each state or territory. In NSW, this is set out in the Property (Relationships) Act 1984 (NSW).
Formalising and enforcing a private agreement
It is a good idea for a separating couple to record any private agreement reached between them about property division in writing. Even then, the written agreement will probably not be enforceable legally unless the parties take the additional step of submitting it to a court and applying for it to be returned to them in the form of ‘consent orders’. Applying for consent orders is an administrative process and does not require any court appearance. For more details see Consent orders.
What orders can the court make?
A member of a separating couple unable to resolve their own disputes about property and finances can apply to the Family Court or Federal Circuit Court for orders relating to:
- the re-organisation and sharing-out of the property and debts of the parties (‘property settlement’); and
- provision of financial support from one party to another (‘maintenance’).
It is important to remember that an application to the court for property or maintenance orders may be made at anytime between separation and divorce, but must (ordinarily) be made within 12 months of the divorce.
A person can apply to the court for an order that their spouse, or former de facto partner, must pay him (or her) a regular amount to assist with living expenses after separation. This is called a maintenance order. The court will make a maintenance order when, because of such factors as age, health, financial resources, child-raising responsibilities or earning capacity, the financial situations of each party after the separation and/or divorce (and even after the property settlement) appear to be significantly different.
Maintenance orders are rarer these days, when often both parties are income earners and any differences in their likely future circumstances can be adequately provided for in the four-step property settlement process.
In most cases, but depending on the circumstances, spouse maintenance is ordered for a short-term period only (say, up to three years). The time-frame chosen may depend on the age of children, or the time necessary for one party to complete educational qualifications, or re-train for employment.