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Property Settlement in NSW: How Assets Are Divided After Separation

Property Settlement

Dividing and distributing property including assets, liabilities and consideration of financial resources when a party does not have the present benefit of an anticipated inheritance for example can be achieved outside of Court or failing any agreement at Court

Four Step Approach

The law tells us that the Court’s take the following four step approach in determining a property settlement matter following separation of parties to a marriage or a de-facto relationship as follows:
  • Step 1: Establishing the net asset pool including valuation of any assets.
  • Step 2: Assessing the parties contributions towards the net asset pool including the direct and indirect financial, non–financial and homemaker contributions.
  • Step 3: Assessing the parties future needs and consideration of any other relevant factor including age, health or earning capacity.
  • Step 4: Making sure that the property orders represent a division that is just and equitable.

Duty Of Disclosure

In order to begin a property settlement matter, there is a legal obligation for the parties to disclose their entire financial position to the other party in a property settlement matter. This includes bank statements, shares or investments, superannuation, tax returns etc. This legal obligation continues from the start of a matter or proceeding until the matter or proceeding is finalised.

Pre-Action Procedures

Prior to commencing an application in Court, parties are required to participate in pre-action procedures including participating in dispute resolution or mediation, exploring options for  settlement by correspondence and complying as far as practicable with the duty of disclosure.
However, there may be an exception to participating in these pre-action procedures if circumstances of the parties include family violence, circumstances of urgency or if a limitation date is due to expire (Schedule 1 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021)

What factors are considered by the court in a property matter?

Several factors such as the age, state of health, the income, the property and financial resources of each of the parties are considered. Additional factors such as the mental capacity of the parties to a marriage, commitment to child support, the duration of the marriage, the extent of contribution of each of the parties to the marriage, debt and other financial obligations are also taken into account. Initial contributions that are made at the start of the de-facto relationship or marriage, or post separation contributions as well as the disparity in earning capacities of the parties are also looked at.

When do i need to file an application for property settlement?

In case of a married couple, an application for property settlement must be initiated within 12 months of the divorce and in a de-facto relationship the application needs to be filed within 2 years of the breakdown of the relationship. In the event of a delay in filing the applications, the applicant will need to seek permission from the Court and outline the reasons for the delay and hardship.

How do i formalise an agreement once an agreement has been reached?

Once an agreement is reached between the parties, you can either formalise this agreement by way of property consent orders that are made by the Court, or you can enter into a binding financial agreement which is similar to a written contract.
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Property Settlement FAQs in NSW

Property settlement timeframes vary. Some matters are resolved in a few months through agreement or mediation. Court proceedings can take longer depending on complexity and cooperation between parties.

There is no fixed formula. Courts follow a four-step approach that considers the asset pool, contributions, future needs, and whether the outcome is just and equitable.

For married couples, applications must be filed within 12 months of divorce. For de facto relationships, the limit is two years from separation. Late applications require court approval.

Finances are divided based on contributions made during the relationship and each party’s future needs. This includes income, assets, debts, and non-financial contributions.

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