What’s the difference between a divorce and property settlement?
Have you ever heard someone tell stories about going through a divorce? Confused about how the process actually works? You are not alone. There is a common misconception that a ‘divorce’ is the all-encompassing process of divorcing your spouse and splitting your finances. Many people intermingle divorce and property settlements, however, they are viewed separately by the Australian legal system.
The process for obtaining a divorce is, in itself, fairly straightforward. Firstly, the parties must have been separated for at least 12 months prior to making an application for divorce. If the parties have been separated under one roof for the whole or a portion of that 12 months you must file a further affidavit with your application. For information on what to do if you’ve been separated under one roof, check out our article explaining the process here.
There are two options when making an application for a divorce, a sole application, or a joint application. When making a sole application, the other party must be served with a copy of the application prior to the divorce hearing.
There are some circumstances which may make the divorce process a little more complicated. In most situations, neither party is required to attend the divorce hearing, however, in some circumstances both parties are required to attend. Additionally, where parties have been married for less than 2 years, the Court has certain requirements which must be met.
A property settlement is where you and your partner finalise your financial matters. This can be done at any point after separation. It applies to both de facto and married couples. However, once a divorce is granted (for married couples) both parties have 12 months to commence proceedings for a property settlement. The limitation period for de facto couples is two years from the date of separation. If you commence proceedings after the 12-month/2-year mark, you must seek leave to apply to the court out of time. There are only certain circumstances that allow for this, so it is best to settle your property matters as quickly as possible.
Another important thing to note is that when referring to a “property settlement” this is in reference to all your joint assets and liabilities, not just your house. This is often referred to as your joint asset pool, which is essentially all the assets and liabilities that you and your partner own either jointly or separately.
When the Court is considering your entitlements to your joint asset pool, they use a method commonly referred to as the 4-stage process. This is the same method your lawyer will look at when providing you with advice. The 4 stages are as follows:
- Identifying and valuing the joint asset pool – This is made up of current joint assets and liabilities and not assets and liabilities at the time of separation. This means that if the joint asset pool was valued at $450,000 at separation, but one party acquired $100,000 in assets since separation, the joint asset pool which is subject to division is $550,000.
- Contributions – The Court considers initial financial contributions at the commencement of the relationship, in addition to financial and non-financial contributions as well as contributions as a parent and homemaker throughout the course of the relationship. This can include post-separation contributions.
- Further adjustments – The Court considers any other factors that may impact the division of the joint asset pool, including but not limited to future needs due to health and other factors, future earning capacity of both parties and/or the ongoing care of the children.
- Just and equitable – Finally, when making an order, the Court make a final decision based on what is just and equitable or fair given the situation of both parties.
There are a variety of methods to achieve a property settlement including negotiations independently between both parties, lawyer assisted negotiations, mediation or arbitration and finally, commencing proceedings in the Family Court.
Once an agreement is reached, there are further options available to formalise the agreement. For further information on formalising a property settlement view our article here.
The thought of a property settlement and becoming involved in the court process can be daunting for some, however, rest assured that the majority of matters resolve outside of court without any need to commence proceedings. In some situations, parties are required to commence proceedings, however, the Court is committed to assisting parties to resolve their financial matters without going to trial. In 2019, the average time from commencing proceedings to trial was 94 weeks, almost 2 years. However, in the same year, only 10% of applications actually proceeded to trial.
If you would like further information or to obtain advice specific to your entitlements to your joint asset pool, please give us a call at Lynn & Brown Lawyers to discuss booking a strategy meeting to work out the best course of action in your particular circumstances – 9375 3411.
 Family Court of Western Australia, 2019 Annual Review. https://www.familycourt.wa.gov.au/_files/Publications_Reports/FCWA_Annual_Review_2019.pdf
About the Author: Abbish is dedicated to assisting her clients navigate through their Family Law journey to achieve the best possible outcome. Abbish is passionate about building quality relationships with her clients to not only assist them through their journey but to familiarise themselves with their legal options.