Property Settlement Agreements: How to Formalise Your Agreement After Separation

Reaching an agreement about how property will be divided after separation can feel like a major milestone. But agreeing on who keeps the house, savings, superannuation, debts or other assets isn't necessarily the end of the process.

It's also important to consider how your property settlement should be formally documented.

In Australia, an agreed property settlement is commonly formalised through Consent Orders or a Binding Financial Agreement (BFA). Choosing the appropriate option can provide certainty, protect both parties and reduce the risk of financial disputes arising in the future.

What Is a Property Settlement Agreement?

The term “property settlement agreement” is commonly used to describe an agreement between separated parties about how their property, liabilities and financial resources will be divided.

A property settlement may deal with assets and liabilities such as:

▸ Real estate

▸ Bank accounts and savings

▸ Superannuation

▸ Investments and shares

▸ Businesses and business interests

▸ Motor vehicles and other significant assets

▸ Mortgages, loans and other debts

Simply reaching an informal agreement, however, does not necessarily provide the same certainty or protection as properly formalising your property settlement.

How Can a Property Settlement Be Formalised?

There are two common ways an agreed property settlement can be formally documented: Consent Orders and Binding Financial Agreements.

Consent Orders

Where both parties have reached an agreement, they can apply to the Federal Circuit and Family Court of Australia for Consent Orders.

The Court considers the proposed financial orders before deciding whether to approve them. Once made, the orders are legally binding and enforceable.

Consent Orders can address the transfer or sale of property, division of assets, superannuation, liabilities and other financial arrangements.

Binding Financial Agreements

A Binding Financial Agreement is a private agreement between the parties and does not require approval by the Court.

There are strict legal requirements that must be satisfied for a BFA to be binding, including requirements for each party to receive independent legal advice.

Whether Consent Orders or a BFA are more appropriate will depend on your individual circumstances.

What Is Considered When Dividing Property?

There is no automatic 50/50 rule for property settlements in Australia.

The outcome will depend on the circumstances of the relationship and the parties involved.

The property settlement process generally involves considering matters including:

▸ The assets, liabilities and financial resources of both parties

▸ The financial and non-financial contributions made by each party

▸ Contributions as a homemaker and parent

▸ The parties' current circumstances and future needs

▸ Whether the proposed outcome is just and equitable

Property settlements can therefore look very different from one family to another.

For a more detailed explanation of how property is divided after separation, read our Property Settlements 101: How Property Is Divided After Separation guide.

Are There Time Limits for Property Settlement?

Yes.

For married couples, an application for property settlement generally needs to be commenced within 12 months after a divorce becomes final.

For de facto relationships, the general time limit is two years from the breakdown of the relationship.

If the applicable time limit has passed, it may still be possible to seek permission from the Court to commence proceedings, but this isn't automatic.

This is one reason why it's important not to assume that an informal agreement means there is nothing further to do.

Why Does a Property Settlement Need to Be Properly Documented?

Separating couples sometimes reach an agreement between themselves and simply divide their property according to that agreement.

The difficulty is that an informal agreement may not provide the financial finality the parties expect.

Circumstances can also change. Assets may increase in value, businesses may grow, new financial issues may arise, or one party may later seek a different property settlement.

Properly formalising an agreement can provide greater certainty about each party's financial position moving forward.

We've explored this issue in more detail in Consent Orders vs Financial Agreements: Why Properly Documenting Your Property Settlement Matters.

Do You Need a Property Settlement Lawyer?

Getting legal advice before finalising a property settlement can help you understand both your potential entitlements and the consequences of the agreement you're considering.

A property settlement lawyer can help you:

▸ Identify the assets, liabilities and financial resources that should be considered

▸ Understand how the family law property settlement process applies to your circumstances

▸ Negotiate the terms of a proposed settlement

▸ Consider whether Consent Orders or a Binding Financial Agreement may be appropriate

▸ Properly document and implement an agreed settlement

Even where you and your former partner are on good terms and have already agreed on how property should be divided, obtaining advice before finalising the arrangement can help avoid unexpected issues later.

Speak With a Property Settlement Lawyer

Helping you move forward with financial certainty.

If you've separated and are considering a property settlement agreement, our experienced family lawyers can help you understand your options and the best way to formalise your agreement.

Contact KLM Solicitors today to arrange a confidential consultation and receive clear, practical advice tailored to your circumstances.