Like any major life interruption, going through a divorce is a challenging experience for those involved. Following a relationship breakdown, getting your affairs in order can be complicated and time consuming. At Le Brun & Associates, we believe it is useful to know where you stand, so you can begin the process of property settlement with your former partner.
We commonly get questions like “Can I divorce without a property settlement?” To answer simply: yes, you can apply for divorce before financial settlement if you wish; however, it is not recommended. Whilst it’s legally possible, there are important reasons why you should think twice about applying for a divorce without property settlement.
Understanding divorce and property settlement in Victoria
Divorce and property settlement are two separate legal matters under Australian Family Law. From a legal standpoint, divorce is the nullification of a marriage, essentially allowing either party to remarry if they choose to. Settlement of property within the context of divorce and separation refers to the arrangement made between parties to divide assets, liabilities, and financial resources upon separation.
Many separated couples wonder: can you get a divorce without a financial settlement? The answer is yes, but it’s crucial to understand the implications. You do not need to be divorced to obtain a property settlement. However, if you divorce without property settlement, you should be aware of the strict time limitations that apply.
Critical time limitations you need to know
If you divorce before financial settlement, there is a strict 12-month time limit on when you are eligible for property settlement. You must apply to the Family Court for property settlement orders within 12 months of your divorce order becoming absolute. Missing this deadline can result in losing your right to pursue a property settlement claim altogether, unless you obtain special permission from the court, which is difficult to secure.
This is one of the key reasons why getting a divorce before financial settlement is not recommended. The 12-month time limit is in place to provide certainty and avoid future disputes between the parties, but it can create unnecessary pressure and risk.
For de facto relationships in Victoria, a different time limit applies. De facto couples must apply for property settlement within 24 months (two years) of the date of separation. This longer timeframe reflects the different legal framework governing de facto relationships.
What is a property settlement?
Settlement of property encompasses the division of all assets, liabilities and financial resources accumulated during your relationship. In Victoria, the Family Law Act 1975 (Commonwealth) governs how property is divided following separation, whether you’re married or in a de facto relationship.
Property settlement can be achieved through:
- Informal agreement: whilst possible, this is not legally binding and offers no protection if circumstances change.
- Binding Financial Agreement: a formal agreement drafted by lawyers that becomes legally enforceable without court involvement.
- Consent Orders: an agreement approved and sealed by the Family Court, making it legally binding and enforceable.
- Court-ordered settlement: when parties cannot agree, the Family Court will determine how property should be divided.
Even if you’re considering divorce before financial settlement, seeking legal advice early is essential to protect your interests and ensure any agreement is properly documented.
What is defined as property?
“Property” refers to all capital assets owned by either one or both parties and broadly includes almost anything of value acquired during or prior to the relationship. “Liabilities’’ are also included under the property umbrella. This is the legal term for any debts owing.
Examples of property include:
- real estate
- inheritances
- shares
- money
- investments
- insurance policies
- superannuation
- any other assets, such as cars or jewellery
- debts, such as mortgages, loans, credit cards and personal debts.
Once these assets and liabilities have been considered, they are referred to as your “asset pool”. Your asset pool should include all possible items, regardless of whose name is on any documentation, or who you believe has ownership of any one item.
Why you need a property settlement as soon as possible
Whilst you can divorce without a property settlement, there are compelling reasons to finalise your financial matters before pursuing divorce.
- Avoiding time limit pressure: Once divorced, the 12-month deadline begins counting down. Finalising property settlement before divorce removes this pressure and risk.
- Protection of future assets: If you or your former spouse accumulate more assets or wealth after your separation but before property settlement is finalised, these assets could potentially be included in the asset pool and available for the other party to claim their share of.
- Legal certainty: A property settlement should not only be documented but also be enforceable in the Family Court. This is because, as we are dealing with an often highly sensitive issue, one or both parties may change their mind and dispute what was originally agreed upon in an unofficial capacity.
- Peace of mind: Knowing your financial affairs are settled allows you to move forward with confidence and rebuild your life without the uncertainty of potential future claims.
Even if you and your former partner are on reasonable terms and considering divorce before financial settlement, it is in both of your best interests to engage Family Law experts as soon as you separate, to ensure the property settlement is not only fair but legally binding.
The process with lawyers
Divorce without property settlement isn’t recommended – and neither is going through either process without legal help. Engaging lawyers for divorce and property settlement matters increases your chances of a fair and equitable outcome while ensuring you remained informed throughout the entire process.
1. Identify the properties
Both parties will have to determine and work out what the asset pool is in order to decide how to divide it.
Check contributions
The contributions of each party will be considered during property settlement. This can include both financial and non-financial contributions, including gifts from family and friends, taking care of your children or work completed to improve the home.
Assess future needs of each party
The third step is assessing future needs. “Future needs” will be assessed on a range of factors under section 75(2) of the Family Law Act, including:
- Age and health of each party
- Earning capacity and employment prospects
- Care responsibilities for children
- Standard of living during the relationship
- Financial resources and liabilities
- Duration of the relationship and cohabitation
- Ability to support oneself
One party may need a certain standard of finance to support their living situation or may have reduced earning capacity due to their role during the relationship.
Consideration about a Fair Settlement
The Family Law Court will determine if their decision to divide assets will be equitable and reasonable to both parties. Separated couples are encouraged to work out their property settlement prior to going to court.
Going to court
Settlement of property can be made with or without the involvement of the Family Court. Even if you and your partner plan to settle property without the court (which is what we would recommend), it is important to seek legal advice. Our compassionate team of Family Law experts can help you divide your assets and ensure all agreements are enforceable and legally binding.
If you do need to go to court to resolve any property settlement issues, the Family Law Courts require the applying parties to make a genuine effort to resolve their matter before filing. You may be required to attend a mediation service, or to try to resolve your matter with the help of a lawyer.
Finding the best outcome with a lawyer
If you’re wondering “can you divorce without a property settlement?” or considering divorce before financial settlement, professional legal advice is essential.
Our dedicated team of Family Law and property settlement lawyers can help you with a tailored approach based on your individual circumstances. We will work with you to get a fair and equitable outcome and discuss all your options so that you are fully informed of all important steps you need to take through this process. We offer urgent and prompt advice to ensure you make the correct decision.
Contact us today for your FREE 30-minute consultation. At Le Brun & Associates, you can rely on us to help you through this difficult time with compassion, expertise and practical solutions tailored to your circumstances.