In the case of divorce or the dissolution of a de facto relationship, the relationship and the financial division of assets must be finalised via formal property settlement agreement. While some couples may feel that they can work this out themselves in an informal manner, if the proper documents are not filed to show that the property settlement is final and approved by the Court, or a binding Financial Agreement has been entered into, it can leave the couple open to ongoing financial problems. This article is going to review the two options for finalising a property settlement and the danger of not properly doing so.
Finalising a Property Settlement
Consent Orders
There are two types of Consent Orders that can finalise a property settlement. These include a traditional Court Order by a Judge, or the parties can make an Application for Consent Orders.
With an Application for Consent Orders, the parties can still work out the property settlement according to their particular needs and preferences. They can do this with the assistance of a mediator and whilst it is not mandatory, both parties should consider having independent legal counsel. The Application for Consent Orders will then be reviewed by a Judge to ensure that the agreement is fair and equitable. If the Judge agrees that the Property Settlement is sufficient, they will sign an Order accordingly. If the Judge does not feel the Property Settlement is fair and equitable, he or she may request additional information from the parties or refuse to sign off on the application, in its entirety.
Financial Agreements
It is possible for a financial agreement to be considered a final property settlement. This can be done without an application being made to the Court for finalisation. This is called entering into a Financial Agreement. When taking this route, it is imperative that all the procedural and legal requirements of these agreements is met. One of the requirements is that both parties have advice of separate solicitors before entering into the agreement. If any of the legal requirements of a financial agreement are not met, the agreement might not be considered final and fully enforceable.
A Consent Order and/or a Financial Agreement are the only ways in which a property settlement can be legally documented.
What Are the Consequences of a Properly Settlement That Is Not Properly Documented?
There are many concerns that can arise with a property settlement that has not been documented property. The first and most prominent concern is that the undocumented property settlement will not necessarily close out future claims and liabilities of the two parties. That means that one party or the other could come back asking for more and/or one or both parties could be liable for the debts of the other.
Here are some of the possible negative consequences of not properly documenting your property settlement agreement. Please keep in mind that this is not an exhaustive list;
- The Court could determine at a later date that the agreement is not fair and just
- Additional awards could be made by the Court to a party who can show genuine need
- The agreement will not be considered binding or enforceable if one party or the other is not keeping to the agreement
- It is possible that any additional assets, liabilities and income generated by either party could be reachable by the other party
- Tax consequences could exist to which cause a detriment or make one or both parties ineligible for tax benefits
- The separation or division of retirement and/or superannuation funds can be jeopardised by not complying with the requirements of dividing such assets
- If one party dies, it is possible that the division of that person’s estate could be altered and affect the expected beneficiaries’ stake in the estate
In order to be free of these types of lingering worries and concerns, it is imperative that your property settlement be drafted, reviewed and entered into with guidance and clarity. In addition, to be complete sure that there will be no future costs or demands from your ex-spouse or partner, your property settlement must be properly documented in whichever way you deem best for both of you.
In the event that you find yourself in need of assistance, please contact the law offices of Owen Hodge Lawyers. At Owen Hodge, we are always happy to assist clients in understanding the full ramifications of any and all of your legal needs. Please feel free to call us at your earliest convenience to schedule a consultation at 1800 770 780.