If you or your ex (or both of you) have decided that you do not want to involve lawyers in the processes in your separation or divorce, it is likely due to one or more of these reasons:
- You wish to save on legal costs
- You’ve heard from others about their negative experiences; and/or
- You wish to avoid ending up in Court.
While the decision to involve a family lawyer is always yours, it is important to be aware of what can go wrong if you are making decisions about your finances and the division of property without the advice of a family lawyer.
Before we continue, it is important to know that the terms ‘property settlement’ and ‘financial settlement’ are used interchangeably throughout. You will hear these terms in relation to the financial division part of the process. Both refer to the division of all assets (and liabilities) between a separating couple. Applying for a divorce is a separate process from your property settlement and is the process to legally terminate a marriage.
Are You At This Stage of Your Separation Yet?
Here are some scenarios you may be in currently, or may find yourself in as you progress to discuss :
- You and your former partner have come to an agreement about who will get what. It is documented and signed but has not been not submitted to the Court and finalised; or
- You have both finalised your Property Agreement, but without advice or assistance from family lawyers.
Financial Division and Divorce Without a Lawyer
It’s not uncommon for people who fit the description of these two options to later find they have an issue with their financial settlement. We wish to make you aware of the common and avoidable mistakes even the most astute and intelligent people make, that add to the emotional and financial load that many people are already carrying upon the end of a relationship.
- We see that they can later discover that:
- The financial settlement they agreed to is below their entitlement;
- One person has exhausted their share of the agreed settlement and is coming back seeking additional funds;
- The other person hasn’t followed through with the terms that had been agreed upon; or
- The parties have finalised their divorce without a lawyer first, before doing a property settlement and miss the limitation period for the Court to assist with their property settlement or spousal maintenance.
These are not outcomes that happen rarely, they are a genuine risk that most people never see coming. If you do not formalise the terms of your property division, then you are putting yourself at genuine risk of having to go through the stress of these processes, a second time.
Considerations When Contemplating Financial Separation and Divorce Without a Lawyer
For most people, the ‘property pool’ or ‘asset pool’ as it’s commonly referred to, includes the family home and its contents, vehicles and superannuation. It’s not uncommon for people to be unaware that superannuation must be included in the property pool for division. (Yes, even if it is not able to be drawn upon for years).
This is one of many insights that a specialist family lawyer will be able to share with you, along with other more significant elements to be aware of, that will be specific to your circumstances.
Common Outcomes of Separation and Divorce Without a Lawyer
Often we see that separating couples have made an agreement between themselves something like this…
They agree to sell a property and split the proceeds of the sale, each keeping a car, dividing the contents of the home and leaving their super as it has been.
The Perceived ‘Fair’ Split
While that may appear to be a 50-50 split that seems fair to both parties at the time, it may not be sufficient in reality. For example, if one person has been employed full time for the duration of their relationship, increasing their skills and expertise, while the other has been working part time to care for their children, there is often an imbalance in earning capacity. This issue may only become obvious to one or both people as time passes.
In this instance, and other scenarios, it is common that something known as an ‘adjustment’ should be made to take any factors like this one into consideration. There are numerous ways in which adjustments can be made or should be considered. A family lawyer can provide guidance as to what the adjustments (if any) should be, to make the agreement ‘just and equitable’.
Future Financial Burdens
Another common issue that arises when people do not seek the advice of a family lawyer is overlooking the financial burden that may be incurred from the sale of a property. If your property settlement has not been formalised, then there is no opportunity for stamp duty or capital gains tax relief.
What Makes a Property Split Final?
To formalise a property settlement, you will need to present the terms of your agreement to the Court. This is done either by submitting draft Consent Orders or submitting a Binding Financial Agreement (BFA).
Consent Orders
If you and your former partner or spouse have reached agreement about your financial settlement and want to formalise the agreement and make it legally binding you can apply to the Federal Circuit and Family Court of Australia for consent orders.
Binding Financial Agreement
A Financial Agreement is made binding (enforceable) where the terms of the Financial Agreement is agreed to by both parties, with both having sought independent legal advice. This is an agreement between the parties and is not submitted to the Court like consent orders. Having legal advice on this document is an essential element to make it legally binding.
If you don’t formalise your property settlement with these options, there is always the risk of someone coming back for what is often referred to as a ‘second bite of the cherry’. This can create great havoc when people’s lives are often just starting to settle. Even if they are not entitled to more, the process will need to be undertaken if there was no formalised by Consent Orders or a Binding Financial Agreement.
Avoid Having To Revisit Your Financial Settlement
There is always risk when people fail to go through the right steps to formalise their terms of their property settlement. While some people may have gone through these steps themselves without legal advice, without issue, this should not guide your decision making as each separation is different.
While what is agreed to at one point might make sense for both of you at the time, there are numerous other grounds for people to apply to have the process revisited and a new property division to be determined.
What is most troublesome for people who need to go through this process again later on, is often related to the upheaval that having to revisit the terms of the financial agreement creates. So while it may seem to make perfect sense to separate or divorce without a lawyer involved, in reality, it is far better to involve a specialist family lawyer early.
It will almost always be more expensive to involve a lawyer at the point where you need to go through the process a second time. So, to inform your decision making and avoid unnecessary stress and upheaval to your life again, consider seeking an appointment with a family lawyer so you can become aware of the potential risks specific to your circumstances and you can then decide what you want to do informed and make decisions with genuine clarity.
Additional Property Settlement Resources Information
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