If you are separated but not yet divorced, you may be wondering whether you should finalise your property settlement before divorce or wait until after the divorce is granted.
In Australia, you do not have to wait for your divorce before dealing with your property and financial affairs. In fact, if you and your ex have reached agreement, it is often sensible to formalise your property settlement before the divorce is finalised.
Divorce and property settlement are separate legal processes. A divorce legally ends the marriage. A property settlement deals with how assets, liabilities, superannuation and other financial interests are divided between you and your ex. The two processes can therefore happen independently.
For many separated couples, dealing with property first can provide greater certainty and avoid leaving an important financial issue unresolved after the divorce.
Can you do a property settlement before divorce in Australia?
Most definitely yes. You can formalise a property settlement before you are divorced. You do not need to wait until your divorce is finalised before applying for property orders or consent orders.
The Federal Circuit and Family Court of Australia treats divorce proceedings separately from financial and property proceedings. Similarly, the Family Court of Western Australia will accept and process an application for consent orders filed after separation, without waiting for the divorce.
This means a separated married couple could, for example:
- Separate.
- Identify and value their assets, liabilities and superannuation.
- Negotiate an agreement about how their financial affairs will be divided.
- Formalise that agreement through consent orders.
- Apply for divorce separately once the requirements for divorce have been met.
The timing of these steps will depend on the circumstances of each couple. However, where both parties have reached a genuine agreement about their property, there may be little benefit in deliberately leaving the financial relationship unresolved simply because the divorce has not yet been finalised.
It is also important to understand that an informal agreement is not necessarily the same thing as a legally binding property settlement. If you and your ex have agreed who will retain the house, how bank accounts will be divided or who will take responsibility for particular debts, you should consider how that agreement will be formally documented.
A consent order is one way of doing this. When the Court makes consent orders, the agreement becomes legally binding and enforceable, provided the Court is satisfied that the proposed orders are just and equitable. This is essentially a requirement that the agreement reached is fair.
For guidance on preparing an Application for Consent Orders, see the our guide located here.
Do you have to be divorced to settle property?
No. Divorce is not a prerequisite to settling your property. In Australia, married couples can begin dealing with their property and financial affairs after separation, even if they remain legally married.
This distinction is important because people sometimes assume that divorce is the event that legally ends all financial ties between former spouses. It is not.
A divorce order ends the marriage, but it does not automatically divide the family home, bank accounts, investments, businesses, vehicles, debts or superannuation. A divorce order does not determine issues about finances, property or maintenance.
Your property settlement may need to consider a wide range of financial interests, including:
| Financial interest | May be relevant to the settlement |
|---|---|
| Family home | Yes |
| Investment properties | Yes |
| Bank accounts and savings | Yes |
| Shares and investments | Yes |
| Businesses and company interests | Yes |
| Vehicles | Yes |
| Mortgages and other debts | Yes |
| Superannuation | Yes |
| Certain financial resources | Potentially |
There is also no automatic rule that property must be divided 50/50. The Court considers the particular circumstances of the relationship, including financial and non-financial contributions, contributions as a homemaker or parent, and the parties’ current and future circumstances.
That is why it is important not to assume that a particular percentage split is appropriate simply because it appears equal.
What time limit applies after divorce?
For married couples, the important deadline is generally 12 months from the date the divorce takes effect. After that period, a person seeking to commence certain financial or property proceedings will generally need the Court’s permission.
This is one of the most important reasons to understand the relationship between divorce and property settlement.
A divorce is not final on the day the Court grants it. In most cases, the divorce order takes effect one month and one day after it is granted. The 12-month period for financial or property proceedings runs from the date the divorce order takes effect.
For example:
| Event | |
|---|---|
| Divorce granted | 1 March |
| Divorce takes effect | 2 April |
| Deadline | 2 April the following year |
The dates in any particular matter will depend on the actual divorce order, so they should be checked carefully.
Importantly, this does not mean that a married couple has only 12 months from separation to resolve their property settlement. The one-year limitation period for married couples is linked to the divorce becoming effective. Before divorce, the position is different.
If you are approaching the deadline and negotiations have not been finalised, do not simply assume that you can continue negotiating indefinitely. You should obtain legal advice about protecting your position.
Is it better to settle property first, or apply for divorce before property settlement?
Where the parties have reached agreement, settling the property first is often a sensible approach. It is not legally compulsory, but resolving the financial relationship before divorce can provide certainty and reduce the risk of overlooking the property limitation period.
There are several practical reasons why couples may choose to finalise their property settlement before divorce.
1. It provides financial certainty
Separation can leave people in an uncomfortable financial halfway point. You may have physically separated, but still own a house together, have joint bank accounts or remain financially connected through debts and superannuation.
A properly formalised property settlement can provide greater certainty about what each person will retain following separation.
2. It avoids leaving the financial relationship unresolved
Divorce may feel like the final step in ending a relationship, but the divorce itself does not divide the property.
If you divorce first and then put off your property settlement, it can become easy to lose track of the relevant deadline.
3. It can help couples move forward
For couples who are able to reach an amicable agreement, formalising their financial arrangements can provide a clearer end point.
This can be particularly important where the couple has children and wants to maintain a cooperative relationship after separation.
4. It can deal with more than just the family home
Property settlement is not simply about deciding who gets the house.
The overall financial position may include superannuation, savings, investments, debts, businesses and other assets or financial resources. A proper settlement should consider the overall financial picture rather than focusing only on the most obvious asset.
How do you make a property settlement before divorce legally binding?
If you and your former partner have reached agreement, one option is to apply for consent orders. Consent orders are proposed orders that the parties agree upon and ask the Court to make.
The Court must still be satisfied that the proposed property orders are just and equitable. Reaching an agreement between yourselves does not automatically mean the Court will approve it. The agreement has to be fair.
A consent order application generally requires detailed financial information from both parties. This means you should not simply list the assets that are changing hands. The Court needs sufficient information about the parties’ overall financial circumstances to assess the proposed settlement.
For example, if one person is retaining the family home, the application will still need to disclose other assets, debts and superannuation held by both parties.
Legal Aspirations provides a Consent Order templates and example Consent Orders to help you out.
If you and your ex have agreed on your property settlement and want to prepare the documents yourselves, you can also use our personalised questionnaire to generate an example Consent Order that is specific to you and your circumstances.
Before entering into a property settlement, it is sensible to obtain independent legal advice about your individual circumstances. Family law property matters can be complex, particularly where there are significant assets, businesses, trusts, complex superannuation interests, international assets or disagreement about contributions.
What happens if you divorce before property settlement?
You can still deal with your property after divorce, but you should not ignore the time limit.
Divorcing before resolving your property settlement does not automatically prevent you from later seeking property orders. However, once the divorce becomes effective, the 12-month limitation period becomes particularly important for married couples.
If you do not resolve your property arrangements within that period, you will need the Court’s permission to commence proceedings. Permission is not something you should assume will automatically be granted so it can be a pretty big deal if you miss it.
Waiting until after divorce to think about property settlement can create unnecessary risk.
If you have already been divorced and your property settlement remains unresolved, it is important to check the date your divorce became effective and obtain legal advice about the applicable deadline.
What about de facto couples?
The timing rules are different for de facto relationships.
For a de facto relationship, the general limitation period for commencing proceedings about property and financial matters is two years from the breakdown of the relationship. There is no divorce process for de facto couples, so the one-year post-divorce deadline applicable to married couples does not apply.
The legal requirements for a de facto property settlement can also be different depending on the circumstances of the relationship and the applicable jurisdiction.
If you are unsure whether your relationship qualifies as de facto for family law purposes, or whether you are within the relevant limitation period, you should obtain legal advice.
Property settlement before divorce: what should you do?
If you are separated and considering divorce, there is no requirement to wait for the divorce before addressing your property settlement.
As a general guide, consider the following:
- Identify all assets and liabilities. This can include property, savings, investments, vehicles, businesses, debts and superannuation.
- Obtain accurate valuations. Knowing what the asset pool is worth is an important part of negotiating a settlement.
- Consider both parties’ contributions and circumstances. A property settlement is not automatically a 50/50 division.
- Reach an informed agreement. Consider obtaining independent legal advice before committing to a settlement.
- Formalise the agreement. Consent orders can turn an agreed property settlement into binding court orders.
- Keep the divorce and property processes separate in your mind. Finalising one does not automatically finalise the other.
- Watch the deadlines. For married couples, the relevant 12-month period starts when the divorce takes effect.
The bottom line
Property settlement before divorce is not only allowed in Australia, it can be a practical way to finalise your financial relationship before your marriage legally ends.
You do not have to be divorced before settling your property. Divorce and property settlement are separate processes, and an agreed property settlement can be formalised through consent orders before the divorce is finalised.
If you choose to divorce first, remember that the divorce does not divide your property. For married couples, the 12-month limitation period for commencing financial or property proceedings runs from when the divorce takes effect. Missing that deadline can mean needing the Court’s permission to proceed.
If you and your ex have already agreed about your property and want to formalise that agreement, Legal Aspirations can help you prepare your personalised Minute of Consent Orders for an application to the Court.
This article provides general information only and is not legal advice. Every property settlement is different. You should obtain independent legal advice about your own circumstances before entering into a property settlement or applying for consent orders.