You’ve been separated from your ex for almost 2 years BUT never got around to formalising your property settlement. You knew your ex was bad with money, however, you never really knew the full extent. Out of the blue, you have received a letter from your ex’s family lawyer proposing a property settlement. And they have proposed that you should take over some of your ex’s personal debt, which now totals over $100,000!
Or, say you and your ex had modest assets and were on good terms. Because of this, you decided not to formalise your financial affairs or get lawyers involved. One year later, your relationship with your ex goes sour because they found out you have re-partnered. Around the same time, you receive $1 million dollars (whether it’s a personal injury payout, redundancy, inheritance or lottery win – you name it – it’s happened). Two weeks later, you receive a letter from your ex’s family lawyer seeking a share of that payout.
It’s safe to say that nobody wants to be in this position. And while these scenarios might sound farfetched or you think ‘this will never happen to me’, they are real life examples that demonstrate why you shouldn’t delay formalising your financial affairs, otherwise known as a ‘property settlement’.
This post sets out our top 3 reasons why you should sort out your property settlement ASAP after separation.
1. Your Assets Are Valued At Today, Not At Separation
The assets, debts and super to be divided are calculated at today, not the date of separation.
Things to keep in mind are that your super will likely increase as time goes on, you might purchase a new asset, build up savings, or your business might suddenly go through the roof. Or, if you’re lucky enough, you might even win the lotto!
If you don’t formalise your property settlement before this build-up of wealth, your ex could be entitled to a portion.
On the flip side, your ex might accumulate new or more debt. Unfortunately, we have seen this occur many times and without obtaining the proper legal advice shortly after separation, many have fallen into this trap.
2. Your Relationship With Your Ex
If you have a good relationship with your ex (i.e. you can still communicate and agree on things without causing a fight), you should absolutely try to reach an agreement about the division of your assets as soon as you can.
This doesn’t mean you need to have the conversation the day after you separate. But, we do encourage you to come to an agreement while things are amicable. Because, in our experience, relationships can suddenly go downhill and it’s much easier to reach an agreement when you are able to effectively communicate with each other.
Before you have the “property settlement conversation” with your ex, we always recommend that you speak to a family lawyer first. Doing this will help you to learn about how family law, separation and property settlements work; what you are both entitled to; and what obligations and rights you each have.
If you are able to reach an agreement with your ex, you should then formalise this as soon as possible. See our earlier post “We Don’t Need To Involve Lawyers… Do We?” for more information on how and why you should legally formalise your property settlement agreement.
3. Property Settlement Time Limits
Many people don’t realise that there are legal time limits to when you can apply for property settlement orders from the Court after separation.
If you are in a de facto relationship (i.e. not married), then you have 2 years from the date of separation to apply to the Court for property settlement orders.
Couples that are divorced have 1 year from the date the Divorce became final.
For married couples who are not yet divorced, there is no time limit. This means you can apply for property settlement orders at any time (it doesn’t mean you should put it off though!).
Check out our earlier post “Time Limits – Don’t Miss The Family Law Deadline” for more information on the family law time limits and what happens when you are out of time.
If formalising your property settlement is on your ‘to do’ list, we strongly recommend that you make it a priority. Delaying can cause unintended consequences and can often “muddy the waters” with your ex. Finalising your property settlement also means you can transition into the next chapter of your life without worrying about the possibility of ‘sharing’ your new assets with your ex or being responsible for their debts.
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The information contained on this site is for general guidance only. No person should act or refrain from acting on the basis of such information. You should seek appropriate professional advice based on your particular circumstances.