Property Settlement Vs Divorce – What is the Difference?
Divorce and property settlement are two different and separate family law processes, but they are commonly confused as one single matter. At Robert Wood and Associates, our expert solicitors have more than 35 years practising family law in Melbourne and are dedicated to helping our clients receive the support and solutions they need during this difficult time. Here we will look at the difference between divorce and property settlements and see which process take priority.
Divorce Settlement or Property Settlement?
The applications for both can be filed in any order, or at the same time. Some couples divorce and never formalise a property agreement, while others may formally split their assets and never get around to filing for divorce. Neither of these situations is recommended. A property settlement is the formal division of property following a couple separating. Discussions regarding the division of assets can occur as soon as a couple separates. A divorce is the legal termination of the marriage and will allow the parties to remarry.
What’s Involved in a Property Settlement?
A property settlement can be formalised without applying for a divorce. A property settlement is an arrangement to divide assets, liabilities and financial resources after separation. There is no set formula used to divide property, the court will decide what they believe is just and equitable based on the individual circumstances of your family. Property can include almost anything of value, including:
- Property owned jointly or independently
- Business interests
- Trust interests
- Assets acquired through inheritance
A property settlement may also include property acquired prior to and after the separation, it is not just limited to property acquired during the relationship.
What About Debts?
Any debts are also part of the asset pool. These have to be taken into account, whether they are in joint names, or in separate names. As well as working out who gets what property, the settlement will also determine who is going to pay off what debts.
Timeframes for a Divorce and Property Settlement
To file a Divorce Application, a married couple must have been living separately for no less than one year. There is no such waiting period to commence property negotiations. Once a divorce is finalised, you have a time limit of 12 months to apply for a property settlement. Generally, it is best to finalise a property settlement before applying for a divorce, as you are not impacted by any time limits.
When Should Divorce Be a Priority?
Divorce may take priority over a property settlement if:
- One or both parties wish to remarry
- If one party is stalling on a property settlement, filing for divorce may actually force the issue as once it is granted, the time limit of one year will start to tick away.
- If one party anticipates they will cultivate future finances in such a way that hard work or application of own funds is likely to reap rewards, a divorce may offer some protection against having to add any future finances into the settlement agreement.
Divorce or Property Settlement – So, Which Comes First?
Typically, a property settlement will be addressed first and a divorce application later. While there may be rare occasions when it may be financially prudent to delay the sale or distribution of assets, this could be incorporated into a property agreement as a separate order. In most cases it is much wiser to reach an agreement around property sooner rather than later.
If you are going through a separation and need friendly and helpful advice, consult the team at Robert Wood and Associates today. Visit our offices in Boronia or give us a call. We will guide you through the process of divorce settlement, ensuring clear communication and compassionate support. For professional advice from caring family law solicitors, call 03 9762 3877.
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