Many times when couples separate they do not go to the time and expense of preparing formal property settlement Consent Order documents or actually go to Court to have a final Order made with respect to property. There are various reasons for this including;

  1. There are no assets to divide or very limited chattels such as furniture and possibly a motor vehicle.
  2. There are few assets physically being transferred with the parties retaining assets that they bought into the relationship.
  3. The parties are able to wholly co-operate in the division of their assets and there are no stamp duty benefits or exemptions which would justify the making of Orders.

What if I don’t have Orders?

If you don’t have property settlement Orders then subject to our comments below, at any time the parties could potentially raise the prospect of a property settlement. As an example, the writer acted for the wife in relation to a separation where they had separated some 30 years ago but still retained joint ownership of a block of land in Sydney. Over the 30 years, the value of that block of land grew to some $2,000,000.00 and although the husband had continued to pay the rates on the land he had not paid any other financial contributions towards its improvement. Ultimately it was decided that it was still a matrimonial asset and when it was sold the proceeds were equally divided save for a minor adjustment for the rates that were paid.

Although the above example is an extreme of a late separation claim, there are other examples that can occur such as an after separation inheritances which can distort what would have been the original property settlement. As another example if the parties have a modest asset pool at separation and one party then receives a large inheritance; although that inheritance may not be strictly divisible between the parties when considering the issue of future needs, the party who did not receive the inheritance may then receive a much larger share of the existing assets in dividing the property pool. If property settlement had been agreed prior to the inheritance being received the original assets may well have been divided much more equally.

So what do I do and where does a divorce fit into all of this?

It can be very important to get preliminary legal advice if you are agreeing to divide your property assets without entering into some form of final Orders between you. Complications can arise if you pass away without any Orders or indeed without having been divorced (this can even be the case if you have changed your Will). However, a divorce can be used at times as a cost-effective way of effecting a binding property settlement. By this I mean that where the parties have by agreement divided their assets then upon a Divorce Order being made there is a 12 month limit for any future claim for property division or leave (permission) of the Court is required for a property settlement. The Court has stated that if the parties have taken steps to otherwise divide their assets (without the benefit of an Order) that they will NOT be given permission for a property settlement where it can be seen that the parties had already informally taken those steps. It is only in the more rare event that the parties still retain joint assets that permission is usually granted so as to enable the parties to then finalise their financial arrangements.

So the case is that you can use a divorce to, in essence, affect a property settlement, particularly where the cost of doing property settlement Orders is excessive relative to a modest asset pool. Each individual circumstance should be considered including the size of the asset pool and whether each party is financially able to support themselves and is therefore unlikely to make a future claim when using such a process of a property settlement by divorce.

Using Your Divorce

In using Your Divorce this could be a well-considered step to, in essence, finalise any prior property settlement distribution without the expense of an Order. Your individual circumstances should be considered but a positive outcome can be achieved in many circumstances.