Nine Common Property Settlement Myths Busted
As a Family Lawyers I often wonder what the one thing I would change about people’s knowledge of adult relationships would be. For me, it always comes down to one thing – what happens if/when the relationship comes to an end.
I’ve now been working in the practice of Family Law for over 30 years, and if I had a dollar for every person who has ever said to me, “I didn’t know that”, or “I wish someone had told me that a lot earlier” I could have retired a long time ago!
The reality is that a lot of people aren’t aware of exactly what happens when an adult relationship ends, be that a de facto relationship or a marriage or even a relationship that isn’t one of those but involves children or jointly held assets.
Nine common misconceptions
Some common misconceptions in property matters (we’ll look at parenting matters in another article) that I often hear are:
“Once you live together for two years then the other party is entitled to 50% of your assets.”
“Once you get married the other party is entitled to 50% of your assets.”
“The assets are only joint assets if they are in joint names.”
“The value of the assets is taken at the date of the separation.”
“Any assets that I owned at the time that we started our relationship aren’t taken into account in a property split.”
“Any assets that I acquire after our separation [but before a property settlement] aren’t taken into account in the asset pool.”
“My superannuation is mine, and he/she can’t touch it.”
“You can’t start your property settlement until after you are divorced.”
“He/she cheated on me, so he/she will get less.”
Whilst some of these statements seem imminently fair to some of us, none of them are accurate, and the truth often comes as a bit of a rude shock when someone is going through a property settlement and had relied on one of these to be the case.
The reality of these misconceptions
50% of the assets myth
I’ve noted two variants to this myth – but either way the statements are incorrect. In fact, a 50/50 asset pool split would be a rare occurrence after a contested Family Court hearing.
The reality is a lot more complicated.
A court will look at a number of things when determining who is entitled to what, and it usually will do so by:
- Ascertaining the net asset pool at that date that it is looking at it.
- Ascertain who has contributed what to the asset pool, including through financial contributions; non-financial contributions; parenting and home-making.
- Ascertaining whether either party has a future need that should be taken into consideration, including whether they have been adversely affected by family violence through the relationship, as well as their ages; their income earning capacity; their need to support anyone else; and various other factors.
- Whether the final property split/adjustment is “just and equitable” (or fair).
Assets only in joint names myth / I owned it before we got together (or acquired it after separation), so it’s mine myth
The Court will consider all of the assets of the parties as part of the asset pool no matter when they were acquired; no matter who’s name they are registered in; no matter whether they are assets in the name of a company; trust; or partnership, except in rare circumstances (which are so rare that they are not worth mentioning here).
Whilst the Court may look at how the asset was acquired when determining whether that means that one person has made a greater contribution to the asset pool (such as, for example, if an inheritance or gift of money from one side of the family was used to purchase a house), that asset will not be excluded from the asset pool, and will be taken into account in the final division of assets.
This applies the same to a business that one party may be the sole operator of throughout a relationship – the Court will look at it as a joint asset.
If you don’t want this to apply you can always look at preparing a Binding Financial Agreement at the commencement of or during a relationship, to ensure that if the relationship ends the assets are dealt with how you want them to be dealt with, and not in accordance with either the Family Law Act or the Family Court Act.
Value of the assets is at the date of separation myth
Many people believe in the misconception that the relevant date for the value of the assets is at the date of separation.
This can come as a real shock to people who have left a property settlement for some time after a separation, particularly if they have been saving or paying off a mortgage, or their superannuation has increased significantly in value since the separation, and they believe that they have been working hard for their own benefit, and not for the benefit of their former partner as well.
I always remind people that a portion of something is better than none of something, but if they have believed that their post-separation savings belonged solely to them, and were not an asset that would be divided upon a property settlement, it is generally still a bit of a blow when this is explained to them.
My superannuation is mine myth
This myth is one where I can see where it came from.
For some time after our current Family Law system came into play under the Family Law Act (for married couples) and under the Family Court Act (for de facto couples) superannuation was not considered an asset of the relationship, and “superannuation splitting orders” were not possible for either married or de facto couples.
This changed in WA for married couples on 28 December 2002, but for de facto couples was a lot longer in the making, not coming into effect until 28 September 2022.
However, the current position is that whether the relationship that is coming to an end is a marriage or a de facto relationship superannuation is something that will be taken into account as part of the asset pool, and orders can be made for part of someone’s superannuation to be paid to the other party’s superannuation fund if the Court believes that is just and equitable.
You can’t start a property settlement until after your divorce myth
Unlike the superannuation myth I have no idea where this one came from.
Whether you were in a de facto relationship or a marriage you can finalize a property settlement at any time after you have separated (and, arguably for a de facto relationship, maybe before you have separated – but again, that’s a story for another day).
The significance of a divorce to a property settlement is that it starts the time ticking for the limitation period to run out. That is, once you are divorced, you only have a year to commence proceedings in the Family Court for a property settlement unless you obtain the leave of the Family Court (which may be opposed by the other party, or may not be granted by the Family Court, particularly if it is significantly after the one year period has ended).
Obviously, there is no divorce for a de facto relationship, so the limitation period for a property settlement for a de facto relationship is two years from the end of the relationship.
The cheating partner myth
The 1975 Family Law Act (which came into effect on 5 January1976) was considered revolutionary for it’s time, and was widely heralded as one of the great achievements of the short-lived Whitlam government, as it introduced “no-fault” divorce.
Like most Australian law, Family Law in Australia had followed English law very closely, and under English law (remarkably up until 6 April 2022 in England) in order to obtain a divorce you had to prove some kind of “marital misconduct”, such as adultery, cruelty, desertion, habitual drunkenness, imprisonment or insanity.
Before 1976 in Australia if someone was the “victim” of the martial misconduct this may have entitled them to a larger share of the asset pool.
Now, there is no such rule that exists, and these “martial misconduct” occurrences will not have an affect on a property settlement, although, there are some who argue with the recent changes to the Family Law Act that came into effect on 10 June 2025, where the Court is specifically required to take into account any effect that the economic impact of family violence has had on the party to a marriage, at least in part the “marital misconduct” rules are making a comeback.
Hopefully this has given you some insight into these myths! But if this has left you wondering whether you or someone you know, might be laboring under one of these misconceptions (or perhaps one of the many that haven’t been mentioned in this article) whilst they are navigating their way through a relationship break-up call 9375 3411 to secure an appointment with one of our family lawyers.
About the Author: This article is authored by Jacqueline Brown With over 20 years of experience practicing, Jacqui prides herself on resolving legal matters in the best interest of her clients with due care and sensitivity. As a director of Lynn & Brown Lawyers, she focusses on providing exceptional family law, wills and probate advice. Her thoughtful approach and out-of-the-box thinking allows Jacqui to achieve client-focussed solutions resulting in positive outcomes for her clients.
