What You Should Know About Property Settlement When Getting a Divorce
This is in no way legal advice.
I give you a general overview of what to expect but the real gems are at the end of this post so if you must skim, please at least read the last parts about ‘mentally dealing with property settlement’ and ‘what I would have done differently.’
Yes, there is probably info on the internet that will give you a generalized framework for what property settlement might look like for a divorce but in my experience (and by way of unscientific survey of friends and acquaintances) the actual financial split can be all over the place, depending on what the facts of your case are.
If you have children together, if one of you is the main breadwinner, how long you have been together, the capacity of the other person to earn in the future, or if there was a financial windfall…all these considerations and more will be taken into account by a judge should you and your ex-partner fail to reach a division of property agreement between yourselves.
What I thought might be valuable to include here are some things that I learned along the way that could be a good starting point for questions.
What is Property Settlement?
The process of dividing your assets after a divorce or separation is known as a property settlement. You can apply for a property settlement if you were married and are now divorced.
How is Property Settlement Different Than Divorce?
While divorce deals with the formalities and paperwork related to ending a marriage, a property settlement relates to severing the financial ties of a couple. This might include division of assets, absolving one of the parties from certain debts, and any other financial matters in which both parties have an interest.
Does the Divorce Need to Happen Before Property Settlement?
In my situation both processes of divorce and property settlement happened at the same time.
Financial pressures have more real-world implications and a time-is-of-the-essence aspect to them, so it’s not surprising they are handled concurrently.
In my case, the divorce was finalized years before we went to family court trial. The property settlement was decided by a judge after hearing all the evidence in our trial. As I mentioned in another blog post about my family court trial, the actual judgement took six months after the date of our trial to be submitted.
If you’re counting, my divorce was finalized in roughly a year-and-a-half while the property settlement took 3+ years. I still call ALL of it the ‘divorce period’ since it was related to and caused by the split.
There Is a Time Limit on Dealing With Property Settlement
While the process of property settlement often occurs at the same time of the lodging of the divorce papers, sometimes it may not be the priority or there are other reasons that could prevent you from doing this right away. Just beware that the property claims need to be filed within a 12-month period of when the divorce is finalized otherwise it may compromise your ability to claim in court.
This doesn’t need mean it needs to be solved within 12 months, lord knows mine wasn’t even close. It means that all of the cards need to be laid out on the table in regard to the assets, liabilities, and other financial info. This makes sense from the standpoint that the evidence is intended to reflect the marriage.
The further away you get from the marriage the harder it is to prove what the state of things were at the time.
How Long Does it Take to Settle Property After a Divorce?
Each case will be different. Mine took years because of the complexities of my ex owning his business (less transparency) and the intertwined issue of asking the court to grant relocation overseas. As mentioned before the time limit is that it needs to be filed within the 12 months of divorce, not completed.
What is considered property after a divorce?
Property encompasses all assets and debts owned by either or both parties, regardless of whether they are in one person's name or both names.
What is the Typical Marital Split?
Every lawyer I have ever asked, and nearly every piece of information on the internet will tell you that the typical split in a divorce settlement is 60-40 to the parent who is the primary carer of the children.
But what’s a typical marriage anyway? From what I can gather, both spouses would be roughly the same age, one works full time while the other has been a stay-at-home parent, they have been married at least 10 years, got married young and brought an equitable amount of funds to the marriage.
The numbers will be highly specific to you but what I think it does allude to is that the parent who is the primary carer of the children will be weighted with a slight advantage at the outset.
Does infidelity or cheating play any role in property settlement?
The reason for divorce (any cheating, who left, which one was the worse partner) is not considered. This is not a judgement based on morality.
What About Pre-Nuptial Agreements or Binding Financial Agreements?
We had one from the U.S. where we were married, it held no water here in Australia. According to my lawyer they’re not common here and not as readily recognized.
I would bet few of them are written in a ‘fair’ manner as considered in the eyes of the court here so that’s probably why they are worth little more than the paper they’re written on. Your lawyer will have an opinion on this, I’m sure.
What Are Some Things I Could Do to Prepare for Property Settlement?
As in the divorce pre-planning blog post I wrote, getting as much evidence and paperwork associated with your finances is the best thing you can do. Even if you’re not sure if it is related, get a copy of it. Some of the items you might want to get hard copies or scan are:
- Bank statements
- Insurance
- House Title
- Mortgage Info
- Loan Information
- Lines of Credit
- Business Accounts
- Business names and registers
- Bills/Utilities
- Superannuation Information
- Work Documents
- Pay Slips
- School Fees
- Spending Info
- Valuations of Cars, Jewelry, Furniture, and other Motor Vehicles
- Employment History and CV of Spouse
You’ll want to have everything that shows the type of lifestyle you had, what the assets are, what the earning capacity of your ex-partner is and more because it all tells the story of the financial picture at that time. And this leads me to the next part…
Your Ex-Partner Could Try To Portray A Different Financial Story
As soon as the divorce happens you will be surprised at how quickly the other person could become ‘unemployed’ and lose their ability to find work at all.
Or that large sums of money are taken out of accounts, that cannot be later accounted for and that no one could possibly have spent in the short duration of your divorce timeline.
This is a tragic (and common move) in divorces.
If you are considering doing this…. please do not.
If you are dealing with someone who has already done this, I’m sorry. Do the best that you can with the resources you still have access to.
Protect What You Can
One of the first moves will probably be to put some sort of lien on the house so it can’t be sold out from under you. Again, not legal advice, just my own experience.
While it’s easy to siphon money from an account and for it to disappear overseas and become untouchable, a house is an obvious piece of property that you can protect as it can’t be offloaded as quickly.
Another thing to look out for is if there is a line of credit on the house, money can be taken out of it. For example, theoretically you could have a house that is fully paid off, but there is a mortgage line of credit on it. By the time you get to trial, the mortgage line of credit now has $800,000 owing and that money has simply disappeared or was ‘spent’ in 2 years by the other party.
They’ll have a lot of explaining to do, but that still doesn’t negate the fact that the money is now nowhere to be seen.
You’ll also want to keep eyes on whatever other tangible assets might be worth something.
My Advice for Mentally Dealing With Property Settlement
Money makes people do funny things.
The unfortunate part about family court and the fact that it takes so long, is that it’s a game that advantages people who are willing to do unethical things.
Meanwhile, there you are patiently waiting for your day in court, feeling helpless until then to do anything to stop what’s happening.
It feels extremely unfair, and yet, I still believe it is incredibly important to stick to your guns and run a fair race. When you start to get caught up in how much might have been taken from you, you run the risk of spiraling into a deep dissatisfaction and resentment. Essentially, you become controlled by this sum of money.
Frankly, if someone else is willing to use deceit to control and hide what might otherwise have been considered shared property in the eyes of the judge and court, I think that speaks to someone’s greed and a serious lack of wellbeing.
Please, sleep well knowing that your hands are clean.
The other person is undoubtedly living with feelings that they will never have enough. Afterall, why would someone act in that manner if they weren’t on some level deathly scared of being destitute?
They have slightly more money, but you have peace of mind.
Plus, it all comes out in trial.
Judges have seen every play in the book
What I Would Have Done Differently in my Property Settlement
The main thing I wish I would have done is taken half of the money that was in a joint account from the outset.
I was really worried about the optics of removing a large sum of money. I didn’t want the judge to look at me like I was THAT person. But by the time we got to court those funds were gone. My life would have been a little easier if I had had that money from the outset.
The funny thing is, when I went to the bank a banker said I would be well within my legal right to take all the money.
I understood what she meant but that wasn’t my style.
Thinking back, even if I took ALL of it, moved it into my account for safe keeping or to live on, I would easily have been able to justify this as taking my portion of the account and having the rest for safekeeping if I was ever asked by the judge to hand it over.
It’s only a problem when stuff goes missing altogether with no plausible reason.
In my humble opinion, for every move that might even look remotely shady, if you can justify the reason and are transparent about it, I don’t see how there would be a problem. Of course, ask your lawyer if you are unsure.
But for real, the money would have been safer and doled out evenly if it was originally moved to my account from the outset.
Food for thought.
You can tell a lot about a person by how they make it through property settlement. I don’t have a lot of regrets about it. As I didn’t have control or access to significant bank accounts held by my ex-partner, I knew the house was the main asset I could claim a portion of. That was my focus, and it represented the life I knew.
At some point I realized there probably were a lot of other things that were hidden from me but it didn’t matter. I was assured by my legal counsel the judge would do whatever she could to make things fairer (which she did to some extent) and I was happy to move on from that.
Learning to fight in this process and learning when to walk away are two of the most valuable skills you can acquire during this stressful period.
Property settlement is a very short period of time, be smart about it, don’t let it change who you are, but certainly fight for what is fair.