Home > Podcast

E45: Top Six Questions on Property Settlement

On the Show Today You’ll Learn

Property settlement is one of the first things that separating couples need to deal with, and often one of the most emotional.  In this episode, Ben and Heather answer the top six most commonly asked questions on property settlement.  Over the years Ben and Heather have dealt with so many questions about property settlement, both in their practice and through the podcast.  They have whittled down those questions to the 6 most frequently asked and on today’s show provide you with answers.  Here are the six questions:

  1. When should I start the property settlement process and how long does it take for the assets to be divided?
  2. What sorts of things get included in a property settlement and how is this agreed?
  3. What share am I going to get? Is it always the case that property is divided 50/50?
  4. Can I be forced to sell the family home?
  5. How does the Court decide who gets what in a property settlement?
    1. Do I get to keep the property I brought into the relationship?
    2. What about money or assets I’ve inherited?
    3. What about my super?
    4. What if I’ve built up a successful business?
    5. What about assets I’ve accumulated since the separation?
  6. Do I really need to pay lawyers to formalise my property settlement?

Links & Resources Mentioned in This Episode

Application for Consent Orders: these forms should be completed to formalise your property settlement agreement.  The forms can be completed by yourself or your lawyers.

Past episodes relevant to property settlement:

E2: Getting a Fair Property Settlement

E13: Property Valuation

E16: Divorce & the Family Business

E23: Two Views on Property Settlement

Subscribe to The Family Matters Show


Full Episode Transcript

Welcome! Top Six Questions on Property Settlement

Benjamin Bryant: Welcome to episode 45. I’m Benjamin Bryant from Bryant McKinnon Lawyers and if it’s not already obvious, I’m doing this show with a cold. Today’s show is dedicated to property settlement. We know this is one of the first things that separating couples have to deal with and often one of the most emotional. Over the years, we’ve dealt with so many questions about property settlement, and we’ve noticed that our podcasts on property settlements are among the most listened episodes. So we’ve sorted through all of the questions we get on a daily basis, and that get sent to the show and we’ve whittled them down to the six most frequently asked questions. Today we’ll be answering those top six questions. Now, when I say we, I’m referring to myself and my partner and family law specialist, Heather McKinnon. Welcome Heather. Feeling ready to take on some property settlement questions?

Heather McKinnon: Yes, I am Ben. I’m ready to go into the deep world of property settlement again.

Benjamin Bryant: Great. And Heather. You are right to suggest that we’ve talked about property settlement so many times already on this show. So, if this is a topic that interests you, I highly recommend that you also check out some of our previous podcasts on the topic. We’ve put a link to all relevant podcasts in the show notes, but you might take note of the following episodes. Episode 2: Getting a Fair Property Settlement, Episode 13: Property Valuations, Episode 16: Divorce and the Family Business, and Episode 23: Two Views on Property Settlement.

Benjamin Bryant: Now we’re ready to jump into those top six most frequently asked questions. But first, let me remind you to share this show with friends and family on the path of separation and divorce. This episode is particularly appropriate for anyone just starting down this path, as these questions will be top of mind. We’ve also got a huge library on a wide range of subjects with world-class experts, so please share this podcast with anyone who may benefit. Okay, Heather. Let’s get started on property settlements’ big questions.

Q1: When should I start the property settlement process and how long does it take for the assets to be divided?

Benjamin Bryant:  Now everyone is in a hurry to get the money sorted out. So, one of the earliest and most common questions we hear relates to timing. When should I start the property settlement process and how long does it take for the assets to be divided?

Heather McKinnon: Everybody wants to know the answer to this on the first appointment they have, don’t they Ben? So I suppose we should tackle a little bit about what does property settlement mean? It’s the division of both the capital assets and having a look at people’s income position. So if you, for example, have been in a family business and you’ve left the home and the business, you won’t have any income. So we might have to do something urgent to get you access to some of that income. But if it’s a case where you’ve got a house, some superannuation, some motor vehicles and furniture, which is about 90% of Australian couples, then I think you and I would say to people let the dust settle. When you listen to social scientists, they say that 6 to 12 weeks is about the time it takes to get through the initial shock and the grief process. So you wouldn’t start normally thinking about it until you’ve passed that critical first stage. What tends to happen is that people with children focus on settling the kids into new routines. So one party will move out and rent. They’ll settle the kids into the new households, and that’s probably about six months. Most people have divided their assets within a year of separation. So I think that sort of gives you an overview of what we see in practice.

Benjamin Bryant: And Heather I think that’s a great rundown or a summary of when it’s appropriate to do property settlements. But of course the other timing question we have is how long do you need to wait or is there any statutory limitation periods? So what are the formal timing arrangements that people need to be aware of?

Heather McKinnon: So there is a bit of a myth out there that you can’t start your settlement for a year. That comes from the fact that you can’t divorce your partner until you’ve been separated for a year. But of course, property settlement can start at any time after separation, and that’s whether you’re de facto or married. The only two time-limits people need to be aware of are as follows. If you are married and one party lodges a divorce, you’ve got 12 months from when you’re divorced to either sort out your property or to make an application to the court. So remember, if you get a divorce, you have to start to really think about settlement. If nobody bothers about divorce, there’s no time running. You really leave it up to your sense of psychological strength as to when you’re ready to tackle that sort of commercial negotiation. If you’re in a de facto relationship, you have two years from when you separate to either sort out your property or start an application in the court. So we’ve really just got married: you’ve got a year from divorce, de facto: you’ve got two years from separation. So that’s the time that we work with or the time frames. But as I said, most people have well and truly sorted out money within a year of separation.

Q2: What sorts of things get included in a property settlement and how is this agreed?

Benjamin Bryant: Perfect. And the other biggie we get when it comes to property settlement Heather is what are we dividing? Which seems like a very basic question, but not always the case. So Heather what sorts of things get included in a property settlement and how is it agreed?

Heather McKinnon: So the first step in any property settlement assessment is what is there to divide. So if we go through the major categories of assets that people hold, it’ll be real estate. So they’ll have their house. And then we look at whether they’ve got investment properties. Then we look at businesses. So does either party have an interest in a business? That might be a partnership or it could be in a proprietary limited company or it could be in a public company. So we’re looking at those big ticket items. The next big ticket item is usually superannuation. So we’re looking at the superannuation interests of both parties. And then we move down to things like savings, shares and, machinery, equipment. There are thousands of different sorts of assets that are held and our job as family lawyers is to really help you identify what might be available. So for example, if you’re the person that’s been the primary homemaker parent and the other partner has been involved in the commercial world, you mightn’t have an understanding of what you have. Don’t be embarrassed about that. That’s why you’re coming to see us. Because our job is to search public records, to request disclosure from the other party, to get tax returns. All the documents that give us an objective understanding of what somebody owns. And they do get very complex. I mean, even at the moment, you and I are working on a very big case and our client is an incredibly brilliant entrepreneur, but has no idea as to the structures of what the assets are held in.

Benjamin Bryant: And it’s so amazing Heather, the different types of clients that you get. You get some people that come in with their spreadsheets or reams of documents and can tell you exactly what they own and how much it’s worth and who valued it and what the other side say it’s worth. And when was it acquired? And they got all the information ready to go. And you’ve got the clients with the: I don’t know. So you have to, essentially treat everyone differently. The process is the same, like you said, step one, identify what is up for grabs. And sometimes that is a very easy task and sometimes it is a very difficult task.

Benjamin Bryant: Something that you left off the balance sheet, Heather, was liabilities. Sometimes people forget about liabilities, and they come in touting how many millions of dollars of assets that they own, but forget the millions of dollars of liabilities that they own. So, it’s really important, of course, in our role to identify the liabilities, not just what they are and who they’re with, but perhaps how we can deal with them, what happens to them? Will the bank agree? Will the financier agree to that? It’s interesting.

Heather McKinnon: It is. And as we’re speaking, one of the other things that we forgot to talk about is: interest that people might have in assets that aren’t in the legal names of the husband and wife or the other parties to a relationship, particularly things like farming businesses. So we often run cases where inter-generationally everyone’s pooled money when things are all going well. But when a relationship breaks down, then all hell breaks loose because the tax lawyers have done a wonderful job at financial planning for 7 or 8 adults who are in the family group. But then we’ve got to untangle, but what do our clients own of that family interest? So, it gets… the more complex it gets, the more we’ve got to be on our toes, I suppose.

Q3: What share am I going to get? Is it always the case that property is divided 50/50?

Benjamin Bryant: Which is a great segue into my next question, Heather, which deals with steps two and three of the property settlement assessment. When it comes to questions about property settlement, the bottom line for most people is: what am I going to end up with when the dust settles? So a very common question is: what share am I going to get? And is it always the case that property is divided 50/50 between partners?

Heather McKinnon: So it is one of the persistent myths that, if you marry somebody or you live with somebody for a year or so, then it’s 50/50. That’s not the legislative framework in Australia. So there are some jurisdictions, like California, that do have what we call community of property, which is an equal division. And we tend to in Australia get it all mixed up because we’re used to watching American television. So here in Australia every case is dealt with on a factual application of what happened in your relationship and what does the Family Law Act tell us should happen in terms of dividing it. In a very long relationship, I always say to clients and I’ve said on podcasts before, it’s like a set of scales. And you and I ask clients about things like their contribution to the relationship, were their inheritances, were there windfalls, who looked after the kids, what were your earnings like compared to each other? There’s many factors that you and I have to weigh up before we can say to somebody, “Look, this is the range of likely outcomes”. So it’s useless talking to your friends and family about what they got, because they may have a completely different factual situation. At the moment I’ve got clients with significant health issues, and we’ve had to get assessments on things like life expectancy. It gets really ghoulish and tricky, but you have to do that to really work out who needs what in terms of moving forward to have a life that’s sensible when you look at how much assets there are for division. So, I would think 50/50 divisions are the rarity. In fact, there’s not that many when you assess that are an equal division case.

Benjamin Bryant: And for those that are more academically inclined, you can check out section 75 and 79 of the Family Law Act to get the specific issues or assessments that Heather was just mentioning there, as to how a court decides what is just and equitable in the circumstances. And I think Heather it was episode two where we really stepped our listeners through how a court approaches property settlements. So, make sure you tune in to that podcast.

Q4: Can I be forced to sell the family home?

Benjamin Bryant: In many relationships, the family home is not just an asset. So another very common question we get asked is what if my ex and I can’t agree about selling a major asset like the family home? Can I be forced to sell if I don’t want to?

Heather McKinnon:  Look, it is one of the first questions many people ask just at the time of separation or before separation. In our culture, particularly in Australia, the house represents the family and there’s a lot of emotional baggage tied up with that particular asset. In fact, we’re fairly cold and calculating in terms of helping you assess what you’re entitled to. The house, like all the other assets, just has a dollar value. You will be given the chance to keep that house if you can afford to pay the other one out. If your ex-partner also wants the house, often a judge will say, it goes on the market and you can both bid for it. But in the main, it’s my experience that one party will keep the home and the other one will take a cash adjustment. There’s no hard and fast rules. Even though we can sort of put the fear of the big axe falling on the house, it’s not common. It’s my experience that quite quickly people work out whether they can get finance or whether they sell a property. And usually, one will just say, okay, I’ll take my cash, use it as a deposit, go to the bank and I’ll buy another property. Every case is different. When I came into practice, that was 40 years ago now, there was a tendency to leave young parents who had children under school age in properties, if that could be done. And I think a lot of that was because we didn’t have the sort of Social Security networks that we have now, and we didn’t have a very good history in Australia of women being able to go as single women to banks to get money. But that’s long gone and now everyone’s treated equally. You’ll be given the chance to have a go at it and practically most people reach sensible commercial decisions about whether we’re going to sell the house, both get our deposits out of it and move on, or whether one of us will take it.

Benjamin Bryant: And I think it’s fair also in our experience, Heather, going back to your response to the first question: whether you can be commercially sensible in the timing that you’re trying to do the deal. So, if it’s three days after separation, you’re probably not going to be commercially sensible. You’re probably not seeing the former matrimonial home as an asset. There’s a lot of emotions attached to it. And also, we get the people that simply can’t let go. If it’s not being sold, you get some strange requests. For example, maybe we continue on as a joint venture or we remain on titles together as tenants in common so we can both enjoy the property for the future. Which of course tends to be disastrous, but perhaps it’s not. Perhaps you have some, good stories to share.

Heather McKinnon: Nope, not on that one. I think one of the practical things that I often say to clients who are struggling with children’s adjustment to having to move out of the house is, look, this is all about leading and giving your kids resilience skills. It’s amazing when kids go to open homes, how excited they get. And you can quickly get kids excited about designing their own new bedroom or, moving into a street where they’ve got their friends closer. It’s not a hard sell, but you must be psychologically at the stage where you’re able to lead the kids by that example.

Benjamin Bryant: Absolutely. And Heather, I said there was going to be six questions we’re up to question five. But this one has a few questions within it. So, prepare yourself

Q5: How does the Court decide who gets what in a property settlement?

Benjamin Bryant:  When couples are unable to reach an agreement, then property settlement must be dealt with by the court. When things start to get ugly, one of the most common questions we get asked is: How does the court decide who gets what in a property settlement? Do I get to keep the property I brought into a relationship, Heather?

Heather McKinnon: No, you don’t. You might. But it’s not something that the parliament has set out in The Family Law Act. It doesn’t say when a judge is deciding, they must give property brought into a relationship to the person who brought it in. It’s just not a factor. So, for example, in long marriages, you might have people who’ve brought a family farm into the marriage and they want to keep it. The court will look at various options and may give that person the right to buy the other one out, but it’s not guaranteed. So, we really do come down, don’t we Ben, to a dollar figure. What are the couple worth? So, we add up all the assets. We take away the liabilities that exist at the date of hearing. And then we look at what the percentage adjustment will be between them. And then we look at:  So if, for example, you’re worth, you know, $2 million, how will I take my 2 million out? Will I keep the original family farm and some bit of super or will it be sold? These are all things that judges have the power to do. But emotional attachment to capital is not a consideration that the judge can take into account.


Benjamin Bryant: And what about money or assets that I’ve inherited, Heather?

Heather McKinnon: Similarly it’s a contribution made by you to the relationship. Again, emotional attachment to capital is not something that the court can take into account. Practically what tends to happen is people keep the real estate that came from their families and buy the other one out. But it’s not a rite of passage. It’s not enshrined in law that you get the assets that you inherited or brought in.


Benjamin Bryant: And of course, inheritance can be really tricky because it depends how it’s treated, whether it’s before the relationship, during the relationship or after the relationship. What about my superannuation?

Heather McKinnon: Again, superannuation is just a bank account if you like, that is there to be divided. We certainly have to get a valuation of what people’s superannuation was when they started living with their spouse. But it’s not a situation that you keep your superannuation at the end of a relationship, the court will adjust superannuation balances as they see fit. Again, the ownership of a particular asset 20 years ago doesn’t mean that you’ll keep it now, but in the main, people bid for those assets that they brought in and that will come off their side of the ledger.

Benjamin Bryant: Super can be tricky as well because it’s kind of the silent asset and a lot of people even forget about it in their property settlement. And a lot of people also don’t realise that they could be contributing to their ex-partner’s spouse over the 20 year relationship and might be a direct contribution or might be their employer making the contribution on their behalf. But certainly one of the other things that they’re doing to allow that spouse to accumulate their superannuation as they have been. So it’s really interesting. And Heather what if I’ve built up a successful business?

Heather McKinnon: So again, businesses are something that we deal with on a daily basis in our work. In the main, businesses are really personal to the key person who established them. So when we value businesses, a lot of these businesses don’t have much value. So the person that’s earning their income from that business is likely to retain it. But if it’s a business that’s been in existence for decades and has significant value, as valued by the court valuers, then there sometimes are orders made for the sale. Particularly if it’s the biggest asset of the parties. So it’s again horses for courses. But I would recommend listening to the podcasts we did on the valuation of businesses before people get anxious, because a lot of people overestimate the value of their business and so it is a complex area. But certainly, you’ll see instances of famous people having to sell businesses once a family court gets involved.

Assets accumulated after separation?

Benjamin Bryant: And finally, for this question Heather, a bit of a doozy. What about assets that accumulate after separation, but before the parties do a property settlement?

Heather McKinnon: You would not like our jobs during the pandemic. We are tidying up some cases that have been before the court for 4 or 5 years, and some of those cases have involved people making significant financial decisions after separation. So again, the assets the judge is looking at are the assets at the date of hearing, which includes this category, things that have been brought in since separation. Then they have to do an exercise at looking at, well, did the other spouse make contributions to these post-acquired assets. But for example, the one we had a minute ago of an inheritance. This is really common in my age group where people have been married for 30 or 40 years and during the litigation one of their parents dies and one spouse suddenly inherits a lot of money. It’s come in after the separation, before judgement. But the judge has got to now look at, well, what’s the person who has inherited the money’s position going forward compared to the one who didn’t? So, you know, they’re very complex cases.

Benjamin Bryant: And if it’s received already, you go back to step one to identify what are the assets and liabilities of the parties. To the disgruntlement of the person, of course, that received the inheritance. But that’s the way it works.

Q6: Do I really need a lawyer to formalise a property settlement?

Benjamin Bryant: Now, dear listener, believe it or not, a lot of separating couples manage to amicably agree on a property settlement. And Heather for a lot of those people, the common question is do we really need to pay lawyers to formalise a property settlement? Can’t we just agree between the two of us and get on with our lives?

Heather McKinnon:  It would be really nice but the people who can do that usually don’t have assets. So, the main reason that you need to formalise a settlement is so that you do know going forward, your ex-partner can’t make a second claim on property that you then go on to make. The people who reach agreement, formalise the agreement through a thing called an Application for Consent Orders. And you can go on the Family Court website and have a look at that document. Many clients are able to complete it on their own, but where they usually come unstuck is when they start having to transfer real estate to each other or superannuation. Those transfer of assets require quite complex orders and most people in the end will need a lawyer to help with the drafting and the implementation of those transfers of categories of assets. If you are a young couple and you’ve got a block of land, a car and a bit of super, you might be able to do it yourselves. And the Court’s certainly set the website up so you can have a go. But in my experience, most people will need some legal help. I always say to clients, you don’t go to the hospital and say, “Can I just use the hospital to take my appendix out?” It depends on what’s there and how much money. But it does get quite tricky.

Benjamin Bryant: That’s right. I think we should end on a little horror story. A matter that I did last year in which the parties, they separated years ago, probably 20 years ago or something like that, and they sold the house and they split the net sale proceeds 50/50, which was the appropriate thing to do. 50/50 was the appropriate assessment. What they did was, instead of formalising they said, we don’t need lawyers. We can just put our hands on our hearts and say this is it for us. What they didn’t realise is that one of the spouses, ultimately my client in the end, had a very generous superannuation scheme with a little bit of money in it. And some 15 years later or something, it was worth a lot of money. And when he found out about it, he was no longer happy. And so, the hand came off the heart and we received a letterhead from his lawyer essentially asking for the superannuation.

Benjamin Bryant: She said, I will give you half of my superannuation as it was at separation. He said, I’ll have half of your superannuation as it is now. Ultimately, they were able to reach a commercially sensible agreement, Heather. The court didn’t have to decide that one. And it was not halfway, but it was more than what she wanted to give and less than what he wanted to receive. But they ultimately resolved it themselves. So just a little warning for you. The hand-on-the-heart deals don’t always work.

Goodbye for now…

Benjamin Bryant:  Great show, Heather. The two of us have answered these questions so many times and I thought today’s show may have been boring. But as always with you, an exciting show with some fabulous information. I think this will be one of the first episodes I refer new clients to in the future. What about you, Heather?

Heather McKinnon: I agree. This podcast series has become a great resource for people at the beginning of the separation process and should give a good basic understanding of the property settlement process to our clients and to people who listen to the podcast.

Benjamin Bryant: And our resource library just keeps growing. And next month we are going to add yet another great resource to our podcast library and we’ll be talking all about de facto relationships. This is an area where there is often a lot of confusion, and we want to help everyone to know where they stand. So, we will be discussing how and when people become legally de facto and how the law treats you once you’ve been deemed de facto.

Benjamin Bryant: If you have questions related to de facto relationships, please send them to familymatters@bryantmckinnon.com.au or message us on Facebook. We’ll make sure your questions are answered on the show. We’ve put links to all of the past podcasts on property settlement and any other resources mentioned in today’s show, plus a full transcript of this episode in the show notes on our website. And don’t forget, please share this show with friends and family who may benefit. We hope to have your ears again next month.


© 2024 Bryant McKinnon Lawyers
List now to The Family Matters Show, a Bryant McKinnon Lawyers Podcast