Separating from a partner is often challenging—particularly when decisions must be made about property, debts and financial security. In Australia, family law property settlements are designed to achieve an outcome that is just and equitable for both parties, whether the relationship was a marriage or a de facto relationship.

Set out below is a general overview of how property settlements work, the key steps in the process, and how agreements can be formalised.

 

What Is a Property Settlement?

A property settlement is the process of dividing the parties’ assets, liabilities and financial resources after separation. It can include, but is not limited to:

  • Real property (e.g. the family home, investment properties)
  • Bank accounts, shares and investments
  • Businesses and trusts
  • Superannuation interests
  • Vehicles, personal belongings and valuables
  • Liabilities (e.g. mortgages, personal loans, tax debts, credit cards)

The objective is not to “split everything down the middle”, but to reach a division that is just and equitable in all the circumstances.

 

The Legal Framework

Property settlements are primarily governed by the Family Law Act 1975 (Cth). The legislation applies to:

  • Married couples, and
  • De facto couples (including same-sex couples) who meet the legislative threshold for jurisdiction.

A few key principles are worth noting:

  • No automatic 50/50 division: Outcomes depend on contributions and future needs.
  • Fairness is the guiding concept: The assessment is discretionary and fact-specific.
  • Resolution without litigation is encouraged: Negotiation and dispute resolution processes are not only strongly supported by the framework, there are strict pre-action procedures that must be followed prior to commencing Court proceedings.

 

How Property Settlements Are Usually Approached (Step-by-Step)

While every matter turns on its facts, property settlements commonly follow a structured approach.

1) Identify and value the property pool

A complete list is prepared of all assets, superannuation and liabilities (whether held jointly or individually). Accurate valuations may be obtained by agreement or through independent experts (e.g. property valuers, forensic accountants, business valuers).

2) Assess contributions

The law recognises different types of contributions, including:

  • Financial contributions: income, savings, inheritances, gifts, payments toward assets and living expenses
  • Non-financial contributions: improvements to property, unpaid work in a family business
  • Homemaker and parenting contributions: parenting, caregiving and domestic labour

3) Consider future needs (adjustment factors)

The assessment may take into account matters such as:

  • age and health
  • income and earning capacity
  • responsibility for children or other dependants
  • disparities in financial resources (including superannuation)

4) Confirm the outcome is “just and equitable”

Even where contributions and future needs have been assessed, the final step is to consider whether the proposed division is appropriate in all the circumstances.

 

Reaching Agreement (Without Going to Court)

Many property settlements are finalised by agreement. Common pathways include:

  • Negotiation (directly or through representatives)
  • Mediation / family dispute resolution (a structured process to narrow issues and reach practical outcomes)

Where agreement is reached, it should be properly documented and formalised to reduce the risk of later disputes.

 

How to Formalise a Property Settlement

A property settlement is typically formalised in one of two ways:

1) Consent Orders

An agreement can be filed with the Court for approval. Once made, Consent Orders are legally enforceable.

2) Binding Financial Agreement (BFA)

A BFA is a private contract that can finalise property division (and, in some cases, spousal maintenance) if it complies with strict legislative requirements.

Selecting the appropriate mechanism depends on the circumstances, including complexity, urgency, enforceability considerations and taxation/stamp duty implications.

 

If Court Intervention Is Required

If agreement cannot be reached, either party may apply for property orders. The Court will determine the division by applying the legislative considerations outlined above, based on admissible evidence and the particular circumstances of the parties.

 

What the Court Commonly Considers

In broad terms, the Court will look at:

  • the nature and extent of the property pool
  • contributions (financial, non-financial, homemaker/parenting)
  • future needs and any significant disparity between the parties
  • the length of the relationship and how assets were accumulated
  • any material waste by any of the parties
  • the practical needs of children and caregiving arrangements
  • Any other financial resources
Common “Special Issues” in Property Settlements

Certain features can add complexity, including:

  • Superannuation splitting: superannuation is treated as property and may be split by agreement or order
  • Business interests and trusts: these often require specialist valuation and careful analysis of control and benefit
  • Overseas property: additional procedural and enforcement considerations may arise
  • Family violence: in some circumstances, the impact of family violence may be relevant to contributions and/or future needs
Time Limits (Limitation Periods)

Strict time limits apply:

  • Married couples: applications for property adjustment generally must be commenced within 12 months after a divorce order takes effect
  • De facto couples: applications generally must be commenced within 2 years of separation

Extensions are not automatic and may involve additional evidentiary and procedural requirements.

Moving Forward

A properly managed property settlement can provide clarity and financial stability after separation. Early identification of the property pool, careful documentation, and a structured approach to negotiation often assist in resolving matters efficiently and reducing conflict.

Spire Law regularly assists clients to negotiate, document and formalise property settlements, including matters involving complex asset structures, superannuation and business interests.