So you have reached agreement about how to settle and distribute your property. Everything is agreed to, and both parties are amicable. Do you really need to formalise the agreement?
The answer is yes, you really do need to formalise that agreement!
You probably all know that old saying “You can’t have two bites of the cherry”. Well unless you have done a formal property settlement under the Family Law Act the fact is you can take two bites of the cherry.
All too often as lawyers we see clients who think they have done a formal property settlement because they have written something down on a piece of paper and had a Justice of the Peace witness it, or because both parties agreed to a settlement and even have emails that verify the agreement.
The truth is there is no magic in a Justice of the Peace witnessing your agreement or even having a “Gentleman’s Agreement” about the division of property, even if that agreement is written and signed by both of you.
Under the Family Law Act you are required to formalise your agreement either by a Consent Order made in the Family Court of Australia or a Financial Agreement under the Family Law Act.
Without a formal agreement under the Family Law Act there is no recognisable or legal property settlement and either party could seek a property settlement at a later date.
In simple terms this means even though you may think you have settled you could have to start all over again, sometimes years later.
I have witnessed this first hand with a lovely man who settled amicably with his wife several years ago but never finalised his divorce. My client’s financial circumstances changed for the better over the years that they were separated, but unfortunately hers didn’t. As a result, his former wife sought a property settlement which included a post separation inheritance, the increased capital in his home and his superannuation.
My client’s former wife received a second, although in this case thanks to good legal representation, modest property settlement.
This could have been avoided if the original property settlement had been documented properly and formally. Don’t let this happen to you. Even if you’re in agreement make sure you get legal advice on how to formalise your settlement properly.
Formalising your property settlement also provides the benefit of a stamp duty exemption if you have agreed to transfer a property to one spouse. This alone could save you thousands of dollars.
Make sure you get the facts about property settlement. The legal advice you receive today could save you thousands of dollars in the future.