Key Takeaways

• Property settlement is the legal process of dividing assets and liabilities after separation, including real estate, superannuation, debts, and personal belongings.
• Australian law focuses on a “just and equitable” division - based on contributions, future needs, and individual circumstances, not an automatic 50/50 split.
• Property can be divided through mutual agreement (via Consent Orders or Binding Financial Agreements) or by filing an Initiating Application to the Family Court.
• Super is treated as property and may be split between parties, even though it cannot be accessed until retirement.
• Getting early legal advice can help you understand your rights, avoid expensive mistakes, and find a fair solution with confidence.

Separation can often be one of life’s most emotionally and financially challenging experiences. Amid the turmoil, dividing property can become a source of confusion and conflict.

In Australia, property settlements are governed by the Family Law Act 1975 and apply to both married and de facto couples. Unlike some countries where property is simply split 50/50, Australian law focuses on a "just and equitable” outcome, which takes into account a range of factors. These factors include financial and non-financial contributions, future needs, and the overall circumstances of the relationship.

Knowing how the law works is key to reaching a fair split and avoiding long disputes. Whether you're navigating this process amicably or with legal intervention, knowing your rights and responsibilities will help you make informed decisions.

This article explains how property settlements work in Australia, what factors are considered, and the options available for resolving disputes.

 

What is Property Settlement?

At its core, property settlement is the legal process of dividing assets and liabilities (including superannuation) between separating couples. It applies to both married and de facto relationships, including same-sex couples.

 

Defining ‘Property’ in a Family Law Settlement

While referred to as ‘property’, it’s important to note that property is interpreted broadly and covers all assets - whether her individually, jointly, or through a trust or company. The property pool can include real estate, bank accounts, super, businesses, vehicles, debts, and even inheritances.

It’s important to note that super is treated as property and can be divided between parties. That doesn’t mean cashing out super (given there are eligibility requirements) but rather splitting super between the parties’ respective accounts.

For example, one person might keep the family home, while the other receives a greater share of super to create a balanced outcome overall. Regardless of how it’s divided, super can be split through a court order or included as part of a private financial agreement between both individuals.

 

How Property is Divided

Once identifying what the property pool includes, the next step is working out how it should be divided. It’s vital to note that the law doesn’t automatically apply a 50/50 split, but instead takes into account each person’s unique circumstances.

The key principle is to reach a division of property that’s “just and equitable.”

 

When Property is Divided

There are strict time limits on when you can apply for a property settlement, so it’s important to be aware of them early on. For married couples, an application can be made at any time after separation but must be filed within 12 months of your divorce being finalised. For de facto relationships, the window is two years from the date of separation.

If you miss the deadline, you’ll need special permission from the court to move ahead - and that’s not always granted. It can also make the process more complex and expensive, so it’s best to seek advice early and stay within the timeframes where possible.

 

From Assets to Outcome: How the Court Works Through Property Settlements 

To reach a fair and legally sound outcome, the Family Court uses a structured four-step process when determining property settlement:

1. Identifying and Valuing the Property Pool
   Step 1 involves identifying and valuing all assets and liabilities, regardless of whose name they are in. Both people are required to provide full and accurate disclosure of their financial documents. If the matter ends up before the Family Court, failing to share relevant information can lead to penalties.
2. Considering Financial and Non-Financial Contributions
   The court considers both financial, homemaker, and non-financial contributions. Financial contributions include income, savings, or gifts. Homemaker contributions can include homemaking or caring for children, and other non-financial contributions can include physical improvements made to real property. These contributions are equally important and can carry significant weight.
3. Evaluating Each Person’s Future Needs
   The court then considers factors like age, health, earning capacity, and responsibilities for caring for children. An individual with greater future needs may receive a larger share.
4. Ensuring the Outcome is Just and Equitable
   The court makes a final assessment to ensure the proposed division is fair in all the circumstances.

Formalising Your Agreement: Consent Orders vs Binding Financial Agreements

Many couples reach a mutual agreement on how to divide property without going to court. In these cases, the settlement can be formalised through:

• Consent Orders: Approved by the court and enforceable by law. They are typically quicker and cheaper than bringing an initiating application which may result in many months, or years in the court system.
• Binding Financial Agreements (BFAs): These are legal contracts entered into before, during, or after a relationship, outlining how property will be divided. They do not require court approval but must meet strict legal requirements to be valid and enforceable.

Each option has pros and cons. Getting the right legal advice is essential to ensure your rights are protected. If you are considering your options, we recommend that you contact our office for tailored legal advice to your situation.

 

When an Agreement Can’t be Reached: Understanding Court Proceedings

If agreement cannot be reached between the parties, then either person can apply to the Federal Circuit and Family Court of Australia for a property settlement order. Court proceedings can be costly and time-consuming, so are generally considered a last resort.

Before initiating court proceedings, individuals are usually required to attempt dispute resolution through mediation or negotiation. However, exceptions may apply in cases involving family violence or circumstances of urgency such as an upcoming time limitation.

 

Conclusion

Property settlements are a critical aspect of separating from a partner, whether married or in a de facto relationship. Australian family law promotes a fair, not necessarily equal, division of property that reflects each person’s contributions and future needs. 

While the legal process offers flexibility, it can also create uncertainty - especially for those unfamiliar with it. Seeking legal advice and understanding your options early can significantly reduce stress and improve your outcomes.

Wherever possible, reaching a mutual agreement through negotiation or mediation can save time and costs, while still achieving a legally enforceable result through Consent Orders or Binding Financial Agreements. However, if necessary, the courts provide a clear framework to resolve disputes and ensure justice.

Ultimately, property settlement is not just about “who gets what,” but ensuring that each person walks away with a fair foundation for their future.

For further assistance navigating the financial risks of separation, download our Property Settlement Guide today. Take control of your financial future and ensure that the separation process is just and equitable as well as manageable.