LawTalk Blog

Risks in delaying property settlement

Family Law property settlement

We are increasingly coming across clients who have separated and left finalising their Family Law property settlement for many years.

There are considerable risks involved in taking this approach.

Firstly it is important to be aware that there are time limits in bringing proceedings for property settlement or maintenance in Court. For married couples the time limit is one year from the date of divorce and for defacto couples it is for 2 years from the date of separation.

Once that time period expires and you have not finalised your property settlement or issued proceedings, you cannot file proceedings without leave (permission) of the Court. Leave will only be granted for property proceedings if you can demonstrate that hardship will be caused to yourself or a child. 

For maintenance proceedings you will need to establish that at the time the ordinary time limit expired you were unable to support yourself without an income tested pension, allowance or benefit.

There are also other risks associated with delaying property settlement. The law is very clear that the property pool is assessed at the time of any trial, not at the date of separation.  This means that if a person accumulates significant assets post separation by inheritance, lottery win or simply by good money management and saving and investing, those assets will be available for division with the other party.

Similarly, if during the period post separation one party has dissipated assets it can lead to complicated and costly legal arguments as to whether or not those moneys were spent on necessary living expenses. If they were not spent on necessary living expenses, the Court can notionally add them back into the property pool.

The Court treats this as a premature distribution of matrimonial property or put simply, that the person has already received part of their property settlement entitlement. This means that they get less in the final settlement.

"There are also other risks associated with delaying property settlement"

Finally when property settlements are left open for long periods of time, there is always a possibility that one of the parties may die before property settlement proceedings are instituted.  In this case once the parties have died property proceedings can no longer be instituted in Court.  This means that their assets will be distributed in accordance with their Will. If they do not have a valid Will or the Will is challenged by an eligible person, the matter can be further complicated.

Also it is important to note that upon death any assets that are owned as joint tenants (commonly such things as the marital home) will be automatically transferred to the other joint tenant.  This is regardless of what is stated in the Will.  This is because assets owned as joint tenants do not form part of the estate.

It is for these reasons and the added complexity of assessing the parties’ entitlements after a long period of separation that our advice is to speak to a lawyer experienced in Family Law as soon as possible post separation to get advice about your entitlements. 

The lawyer can also advise you on possible changes in the parties’ positions if the matter has been left for a significant period.

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Get in touch with today's blog writer:
Ryan Thomas

Partner in Family Law

Please note, this Blog is posted in Adelaide, South Australia by Andersons Solicitors. It relates to Australian Federal legislation. Andersons Solicitors is a medium sized law firm servicing metropolitan Adelaide and regional South Australia across all areas of law for individuals and businesses.

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