Divorce is a difficult and emotional time for any couple. When going through a divorce or separation, one of the most important and sometimes difficult areas to mutually agree is how to split finances. This can be a complicated process, but it is important to ensure that both parties receive a fair share of the marital assets.
At Paramount Legal, we understand the complexities of divorce and the process for splitting finances. We have helped countless clients navigate this process to achieve a fair and equitable outcome. Read on to understand the steps involved in the process for splitting finances in a divorce.
- The process for splitting up property in a divorce
- The Court’s four step process for the division of property in QLD (if a court order is required)
- Limitation periods following de-facto relationships and divorces
- Spousal maintenance
- How superannuation is divided in divorce
The process for splitting up property in a divorce
The first step in this process is disclosure, in which both parties provide full and frank financial disclosure to each other. This includes providing details of all assets, income, liabilities and financial resources so that both parties have a complete understanding of the other parties’ financial situation.
Common disclosure documents include:
- Bank statements
- Tax returns
- Business accounts
- Pensions & superannuation
- Property valuations
Hiding assets or income during the disclosure process is not only unethical, but it can also result in severe penalties.
It is important to note that financial disclosure is not a one-time event. If the financial situation of either party changes during the divorce proceedings, they are obligated to provide updated information to the other party. For example, if one party receives a large inheritance or a promotion at work, they must disclose this to the other party.
The process of disclosure can be challenging, particularly if one party is uncooperative or if there is a significant power imbalance between the parties. In these situations the value of having a solicitor is highlighted as they step in to facilitate the disclosure process and ensure that both parties have access to all relevant financial information.
Once full financial disclosure has been provided, the next step is negotiation. During this stage, both parties should try to come to an agreement on how to split their finances. This can involve discussions between the parties themselves or with the assistance of a mediator or solicitor. Negotiation is often the most efficient way to reach an agreement and can save both parties time and money.
The negotiation process can involve a range of factors, including the value of assets, the parties’ contribution to those assets, the parties’ income and earning capacity, and any future financial obligations, such as child support or maintenance payments. The goal of negotiation is to reach a fair and equitable agreement that meets the needs of both parties and any children involved.
Negotiation can take time and requires both parties to be willing to compromise. It is essential to approach negotiation with a clear understanding of one’s financial situation and priorities, as well as an understanding of what constitutes a fair outcome.
A mediator or solicitor can be invaluable in facilitating negotiations and ensuring that both parties are fully informed about their rights and obligations. Mediation can be particularly useful in situations where there is a breakdown in communication between the parties or where emotions are running high.
Once an agreement has been reached through negotiation, it is essential to document it in a Consent Order or Financial Agreement. Both a consent order and a financial agreement are a legal document that outlines the agreed financial arrangements.
Consent Order or Financial Agreement
If the parties are able to reach agreement on the division of their assets, liabilities and other financial interests then the next step is to formalize this agreement by either a consent order or a financial agreement.
A consent order is a legally binding document that outlines the financial arrangements agreed upon by the parties during the negotiation process. Once a consent order is approved by the court, the agreed-upon financial arrangements become legally binding on both parties.
It is important to note that obtaining a consent order is only necessary if an agreement has been reached between the parties. If no agreement has been reached, the matter will proceed to court, as discussed below under ‘Court Order’.
To obtain a consent order, both parties must complete and sign an application form outlining the agreed financial arrangements and a set of Court orders setting out how the parties’ assets, liabilities and financial resources are to be divided and retained. These forms must then be submitted to the court along with a fee. The court will review the form and consider whether the agreed-upon financial arrangements are fair and reasonable.
If the court approves the consent order, it will become legally binding on both parties. This means that both parties will be required to comply with the agreed financial arrangements. If either party fails to comply with the terms of the consent order, the other party can take legal action to enforce it.
It is important to seek legal advice when preparing a consent order. A family law solicitor can assist in ensuring that the form is completed correctly, that the agreed financial arrangements are fair and reasonable, and that the document complies with all necessary legal requirements.
A Financial Agreement is a flexible alternative to a consent order, as it can cover a wider range of issues and is not subject to court approval. However, it is important to note that once a Financial Agreement is signed, it is binding and enforceable, even if the circumstances of one or both parties change. Therefore, it is crucial and in fact compulsory to seek legal advice before entering into a Financial Agreement to ensure that it is fair and reasonable for both parties and that it reflects your individual circumstances.
If an agreement cannot be reached through negotiation, the next step is to start pre-action procedures. These procedures are a set of steps that parties are required to take before commencing court proceedings. The aim of pre-action procedures is to encourage the parties to resolve their dispute outside of court and to streamline the court process if court proceedings become necessary.
The pre-action procedure in Queensland involve the following steps:
- Attend dispute resolution: The parties must make a genuine effort to resolve their dispute through dispute resolution services such as mediation or negotiation.
- Exchange information: The parties must exchange relevant information to help them identify and understand the issues in dispute. This includes financial information, such as income, assets, and liabilities, as well as information about the children, such as their schooling and medical needs.
- Send a notice of intention to commence proceedings and make an offer to settle: The parties must make a genuine offer to settle the dispute, either in full or in part. The offer must be in writing and should include details of any proposals for parenting arrangements, property division, or other relevant issues.
- Respond to the offer: The other party must respond to the offer in writing within 14 days of receiving it. The response should either accept the offer, reject it, or make a counteroffer.
It is important to note that failure to comply with pre-action procedures can result in legal consequences. For example, the court may order costs against a party who has failed to comply with pre-action procedures, meaning that they will be required to pay the other party’s legal costs.
If the parties are unable to reach an agreement on how to divide their assets and debts through negotiation and mediation, court proceedings may become necessary.
In court proceedings, a judge will make a decision on how to divide the parties’ assets and debts based on the evidence presented by both parties. The judge will take into account a range of factors, including the value of assets, the parties’ contributions, the parties’ income, earning capacity, and any future financial obligations, such as child support or maintenance payments.
Court proceedings can be lengthy, expensive, and emotionally draining. It is often in the parties’ best interests to reach an agreement through negotiation or mediation before resorting to court proceedings.
If a court order is made, it will be legally binding on both parties. This means that both parties will be required to comply with the terms of the order. If either party fails to comply with the terms of the order, the other party can take legal action to enforce it.
It is important to seek legal advice when preparing for court proceedings. A family law solicitor can assist in preparing evidence, presenting arguments to the court, and ensuring that the parties’ interests are protected throughout the proceedings.
The Court’s four step process for the division of property in QLD (if a court order is required)
The Federal Circuit and Family Court of Australia uses a four step process to determine the division of property.
Step 1: Identifying and valuing assets and liabilities
The first step in the process is to identify and value all assets, liabilities and financial resources of the parties. This includes both joint and individual property, such as real estate, vehicles, businesses, bank accounts, investments, and debts.
It is important to ensure that all assets and liabilities are disclosed, including those that may have been acquired during the marriage or de facto relationship. Failure to disclose all assets liabilities and financial resources can have serious legal consequences, including the setting aside of any agreements reached and potential fines.
Once all assets and liabilities have been identified, it is necessary to determine their value. This can be a complex process, particularly when dealing with assets such as businesses or investments. In such cases, the services of a valuation expert may be necessary to determine an accurate value.
Step 2: Assessing financial contributions, non-financial contributions, and contributions as a parent and homemaker
The second step for the division of property in Queensland is to assess the financial, non-financial, and parenting or homemaker contributions made by each spouse during the marriage or de facto relationship.
Financial contributions refer to the income earned, savings accumulated, and assets acquired by each spouse both before the relationship, during the course of the relationship and after the relationship. This may include income earned from employment, investments, or other sources. It is important to note that financial contributions are not limited to direct financial contributions, but also include indirect financial contributions such as inheritance or gifts.
Non-financial contributions, on the other hand, refer to the contributions made by each spouse that do not involve the direct earning of income. This may include contributions such as the care and maintenance of the family home, operating a family business or managing other investments. Non-financial contributions are often a contentious issue in property settlements, as they are not easily quantifiable.
Parenting contributions are also taken into consideration in property settlements. This includes the contributions made by each spouse in raising any children of the relationship. This may include contributions such as the provision of care, education, and support for the children.
When assessing financial, non-financial, and parenting contributions, the court will take into account the duration of the relationship, the age and health of each spouse, and any other relevant circumstances. It is important to note that the assessment of contributions is not a strict mathematical formula and that the court may take a broad range of factors into consideration.
Step 3: Considering the future needs of each spouse
The third step in the four-step process for the division of property in Queensland is to consider the future needs of each spouse.
When considering the future needs of each spouse, the court takes into account a broad range of factors, including the age and health of each spouse, their earning capacity, their current and future financial resources, and their ability to acquire assets or earn income in the future.
For example, if one spouse has a significantly higher earning capacity than the other, or if one spouse has been out of the workforce for an extended period of time, the court may take this into consideration when determining a fair and equitable division of property.
In addition to financial factors, the court also takes into account the future needs of each spouse in relation to their personal circumstances, such as their health or the need for ongoing care or support. For example, if one spouse has a chronic health condition that requires ongoing treatment, this may be taken into account when determining their future needs.
It is important to note that the assessment of future needs is not limited to the immediate future, but also takes into account the long-term needs of each spouse. For example, if one spouse is approaching retirement age and has a limited ability to earn income in the future, this may be taken into consideration when determining their future needs.
Step 4: Determining a fair and equitable division of assets
The fourth and final step in the four-step process for the division of property in Queensland is to determine a fair and equitable division of assets.
In determining a fair and equitable division of assets, the court takes into account all of the information gathered during the first three steps of the process, including the identification and valuation of assets and liabilities, the assessment of financial, non-financial, and parenting contributions, and the consideration of future needs.
The court’s primary objective is to achieve a just and equitable outcome for both parties, taking into account all relevant factors. The court may consider a range of factors when determining a fair and equitable division of assets, including:
- The financial and non-financial contributions made by each spouse during the relationship
- The length of the relationship or marriage
- The future needs of each spouse
- The age, health, and earning capacity of each spouse
- The nature and value of the assets and liabilities involved
- Any agreements between the parties
It is important to note that there is no set formula for determining a fair and equitable division of assets. The court will consider all relevant factors on a case-by-case basis, with the goal of achieving a just and equitable outcome for both parties.
In some cases, the court may order a division of assets that is not strictly equal. This may occur when one spouse has made significantly greater contributions during the relationship or has greater future needs. The court’s decision will be based on the individual circumstances of each case.
The process of determining a fair and equitable division of assets can be complex and challenging. It is important to seek the advice of an experienced family law solicitor who can guide you through the process and help you achieve a fair and equitable outcome.
Limitation periods following de-facto relationships and divorces
Am I in a de-facto relationship?
A de facto relationship is defined as a relationship between two people who are not married or related by family, but who are living together as a couple on a genuine domestic basis. This definition covers both opposite-sex and same-sex relationships.
To be classified as a de facto relationship, the couple must be living together on a genuine domestic basis. This means that they are sharing a home and domestic duties, and have a commitment to each other that is similar to that of a married couple.
The length of time a couple has been living together is not the sole determining factor in whether a de facto relationship exists. Other factors that may be taken into account include the financial arrangements of the couple, the degree of mutual commitment and support, and the public nature of the relationship.
In Queensland, there are limitations on the time within which a person can make a claim for property settlement or spousal maintenance following the breakdown of a de facto relationship or divorce.
For de facto relationships, an application for property settlement or spousal maintenance must be made within two years of the breakdown of the relationship. If an application is not made within this time, a person may lose their right to claim.
If you were married and have divorced, the time limit for making an application for property settlement or spousal maintenance is one year from the date of the divorce order taking effect. Again, if an application is not made within this time, a person may lose their right to claim.
It is important to note that these time limits are strict and may not be extended except in limited circumstances. As such, it is important for anyone who has recently gone through a de facto relationship breakdown or divorce to seek legal advice as soon as possible to ensure that their rights are protected.
In some cases, it may be possible to apply for an extension of time to make a claim. However, this will depend on the individual circumstances of the case and the reasons for the delay.
Spousal maintenance is financial support paid by one spouse to the other following the breakdown of a marriage or de facto relationship. It is designed to assist the recipient spouse to meet their reasonable expenses and maintain a reasonable standard of living.
Determining whether spousal maintenance is appropriate in a particular case involves a consideration of a range of factors, including the financial needs of the recipient spouse, the capacity of the paying spouse to pay, and the length of the relationship. If spousal maintenance is deemed appropriate, the court will make an order for payments to be made.
When it comes to finances and costs associated with spousal maintenance, there are several key considerations.
Firstly, it is important to note that spousal maintenance payments can have significant financial implications for both the paying and receiving spouse. For the recipient spouse, the payments can provide crucial financial support and help them to maintain their standard of living. For the paying spouse, the payments can represent a significant ongoing expense and impact their ability to meet their own financial obligations.
Secondly, it is important to be aware that the amount of spousal maintenance that is ordered will depend on the individual circumstances of the case. There is no fixed formula for calculating spousal maintenance, and the court will take into account a range of factors when making its decision.
Thirdly, it is important to understand that spousal maintenance orders can be varied or set aside in certain circumstances. For example, if the financial circumstances of either party change significantly, it may be possible to seek a variation of the order. Similarly, if it can be shown that the order was made on the basis of false or misleading information, it may be possible to have it set aside.
Finally, it is important to be aware that there are costs associated with seeking spousal maintenance orders through the court system. These costs can include legal fees, court filing fees, and potentially even expert report fees. It is important to obtain legal advice early on in the process to understand what costs are likely to be involved and to ensure that you are in a position to meet them.
How superannuation is divided in divorce
For many people, superannuation represents a significant proportion of their overall wealth. In the context of divorce, superannuation can be a complex and contentious issue.
In Queensland, superannuation is subject to the same rules for division as other property. The process for dividing superannuation in divorce involves the following steps:
Step 1: Valuing the Superannuation
The first step in dividing superannuation in divorce is to determine the value of the superannuation interest. This is usually done by obtaining a valuation from the relevant superannuation fund. It is important to note that the value of the superannuation interest may not be the same as the account balance, as there may be various factors that impact the value, such as fees and taxes.
Step 2: Assessing Contributions
The next step is to assess the contributions that each spouse has made to the superannuation fund. This includes both financial contributions and non-financial contributions, such as caring for children or maintaining the household. The court will take into account these contributions when determining the appropriate division of the superannuation interest.
Step 3: Considering Future Needs
The court will also consider the future needs of each spouse when determining the appropriate division of the superannuation interest. This includes factors such as age, health, income, and earning capacity.
Step 4: Determining the Division
Once the contributions and future needs have been assessed, the court will determine the appropriate division of the superannuation interest. This may involve making an order for one spouse to transfer a portion of their superannuation interest to the other spouse, or it may involve making an order for one spouse to retain their entire superannuation interest while the other spouse receives a greater share of other property.
It is important to note that there are certain rules and regulations that must be followed when dividing superannuation in divorce. For example, there may be tax implications associated with transferring superannuation interests, and certain conditions must be met for a superannuation interest to be split. It is important to seek legal advice early on in the process to ensure that you are aware of your rights and obligations, and to ensure that the division of superannuation is done in a way that is fair and equitable for both parties.
Who Pays for the Divorce Process?
In Queensland, the parties are generally responsible for paying their own legal fees and court costs associated with the divorce process. However, if one party is unable to afford legal representation, they may be able to apply for legal aid.
How Much Does a Family Lawyer Cost?
The cost of a family lawyer can vary depending on the complexity of the case and the experience of the lawyer. Reach out to us to understand more about our cost structure.
How Much Does it Cost to Get Divorced in QLD?
The cost of getting divorced can vary depending on a range of factors, including the complexity of the case, the legal fees charged by your family lawyer, and any court fees associated with the divorce process. It is important to speak to a family lawyer early on in the process to get a clear understanding of the likely costs involved in your case.
What Can Each Party Claim in Divorce?
In a divorce, each party is entitled to make a claim for property settlement and, in some cases, spousal maintenance. Property settlement involves the division of assets and liabilities accumulated during the marriage, including property, savings, investments, and superannuation. Spousal maintenance is financial support paid by one party to the other, where one party is unable to support themselves adequately.
What if We Have Already Agreed on Our Property Settlement?
If you and your spouse have already agreed on your property settlement, you can apply for a consent order, which will formalize your agreement and make it legally binding. At Paramount Legal we can assist you with this process.
Do I Have to Support My Partner After Divorce?
Whether or not you are required to provide financial support to your former spouse after divorce will depend on your individual circumstances. The court will consider factors such as the income and earning capacity of each party, their age, health, and care of children.
Do I Have to Sell My House in a Divorce?
Not necessarily. In a divorce, the court will consider a range of factors when determining the appropriate division of property, including the contributions made by each party, the future needs of each party, and the overall value of the property. It may be possible for one party to retain the family home, provided that a fair and equitable division of property is achieved.
Are There Ongoing Costs After Divorce?
Depending on the terms of your property settlement and any orders made by the court, there may be ongoing costs associated with the division of property, such as mortgage payments, maintenance costs, or ongoing spousal maintenance payments.