There are times, believe it or not, when some people can work out their property settlement issues amicably and reach an agreement without the need to go to court.
It is important to ensure that any property settlement that you and your spouse agree to is properly documented to ensure that your financial relationship is finalised and all of the loose ends are tidied up. If this does not happen, there could be some serious consequences in the future.
I often recount to clients the circumstances of a previous client who, in attempting to resolve his property settlement matters with his former partner, decided to do an informal property settlement to save the costs of getting solicitors involved. In hindsight, this became a very costly mistake – a million dollar mistake.
On separating from his wife, the former matrimonial home was sold and the proceeds of sale went to the wife. My client retained his business, which at the time of separation was valued at around the same amount as the proceeds of sale of the house. My client thought that this was a fair division of the parties property. He kept his business and went about building it up.
However, the division of property between the husband and the wife was never formally documented. My client went on to form a new relationship some years later and decided to get married. However, the parties had never divorced.
The Family Law Act provides that property settlement proceedings can be brought any time after parties separate and for a period of one year after a divorce order is made.
To enable my client to get married again, he made an application for divorce. Soon after being served with the application for divorce, the wife obtained legal advice about her position. As no formal property settlement had occurred, she made an application for a property settlement some 15 years after the parties had gone their separate ways.
To cut a long story short, my client’s business had grown from a small business in Queensland to a multi-national business with diverse interests. The mistake of not properly documenting the property settlement meant that my client’s soon to be former wife had the ability to have a “second bite” at what was now a very juicy cherry.
It is important to ensure that your property settlement is properly documented by way of a Consent Order or a Financial Agreement. This has the effect of severing the financial relationship between you and for former partner so that you can go about rebuilding or consolidating your financial position after a relationship breakdown.