Separation is never easy, and when significant assets, businesses, trusts, or debts are involved, reaching a fair and amicable settlement can feel overwhelming or even impossible. At Dam Lawyers, we understand that financial uncertainty only adds stress to an already emotional time. That’s why it’s essential to get the right legal advice and support early on so you can do everything by the book and meet all legal expectations.
In this article, we share practical tips to help you navigate complex financial settlements after separation — and protect your financial future.
Tip 1: Understand the Legal Process that Financial Settlements Are Based On
In Australia, property settlements after separation are governed by the Family Law Act 1975. The court follows these four steps to determine how financial and non-financial assets will be split between each party involved in the settlement:
- Identify and value the property pool (including assets, liabilities, superannuation, businesses, trusts, and inheritances).
- Assess contributions made by each party (both financial and non-financial).
- Evaluate future needs (income, health, age, childcare, etc.).
- Ensure the division is just and equitable.
When you understand this framework, you’ll be able to set your expectations more realistically and know which questions to ask during discussions and mediations.
Tip 2: Get a Full Disclosure About Available Assets and Liabilities
One of the first steps in any settlement is exchanging a complete disclosure about each party’s property. This means both parties must share detailed information about
- Bank accounts
- Investments
- Real estate
- Pensions
- Trusts
- Businesses
- Debts and liabilities
- Gifts and inheritances
In complex settlements, hidden or undisclosed assets can derail negotiations and lead to a costly and lengthy litigation process. Always make sure you keep detailed records and insist on transparency. If you suspect your ex-partner isn’t being fully transparent, our legal team can assist in obtaining the details required and take it further if necessary.
Tip 3: Get a Proper Valuation on All Property
In some cases where there are a lot of assets available, valuing businesses, investment properties, superannuation, or family trusts can be complicated. You shouldn’t rely on guesses. Instead, engage independent, court-recognised valuers early in the process.
Professional valuations may be required to:
- Provide an accurate market value.
- Prevent disputes over the real value of significant assets.
- Ensure you don’t get a bad deal.
Tip 4: Understand How Trusts and Companies Are Treated
Family trusts and corporate structures are common in complex financial settlements, and they can significantly complicate matters even more. Even if a trust or company belongs to one of the two parties, it may be considered part of the matrimonial asset pool. Work with our lawyers, who are experienced in family law and commercial structures, to properly assess your interests if you own or have invested in trusts or companies. They will also be able to recommend accountants with expertise in these areas who will be able to offer additional support.
Tip 5: Don’t Overlook Superannuation Splitting
Superannuation is often the second-biggest asset after the family home, but many people forget to consider it when settling their finances.
You can divide superannuation by:
- Making a formal agreement (with advice from your lawyer), or
- Getting a court order (either agreed with or decided by a judge)
Splitting super can be especially important for partners who stayed at home to look after the house and/or children or were on a lower salary during the marriage.
Tip 6: Consider Tax Implications
The tax obligations can be different for various asset transfers, including:
- Capital Gains Tax (CGT)
- Stamp Duty Tax
- Division 7A loans in companies
Fortunately, the Family Law Act provides some tax relief measures, such as CGT rollover relief for property transfers between separated spouses. However, if the tax is structured or calculated incorrectly, parties might end up with unintended tax liabilities.
Always seek financial advice alongside legal advice so you understand the full tax implications before finalising any settlement.
Tip 7: Focus on the Future Needs of Both Parties and Any Dependents
While many people assume that a “fair” settlement constitutes a 50/50 split, the law requires consideration of future needs, such as:
- Who will be the primary carer of any children?
- Are there significant differences in earning capacity? For example, does one party have a severe illness that significantly impacts their ability to work or do daily activities?
Settlements that factor in future needs create more sustainable and just outcomes for everyone involved in the separation or divorce proceedings.
Tip 8: Try Conducting Negotiations Outside of Court if Possible
Court proceedings are costly, time-consuming, and emotionally draining. Wherever possible, you should always aim to settle through informal negotiations or mediation sessions held by a neutral party or a legal team. These alternatives are often quicker, less hostile, and allow more flexible and satisfactory outcomes than a court-imposed decision.
Our legal team can assist with negotiations, but they are also prepared to advocate for your rights in court if it comes to it.
Tip 9: Ensure Everything is Documented Correctly
When you and your former partner come to an agreement, whether it’s about dividing property, splitting superannuation, or finalising financial ties, it’s essential for it to be made in writing and signed.
Even if you’ve reached an agreement amicably or informally, a handshake deal or a written note isn’t enough under Australian family law. Without legally valid documentation, your former partner could make further claims against your asset’s years into the future.
The two main ways to formalise your agreement include:
- Consent Orders filed with the Family Court: This is a formal, court-approved document that sets out your agreement in a clear and enforceable way. Once the court approves the consent orders, they have the same legal effect as a court order made after a hearing, but you don’t have to actually go to court. It’s often the most straightforward option, and it will ensure you get your full entitlement, and your rights will be protected from the moment it’s signed.
- A Binding Financial Agreement (BFA): This is a private contract between you and your ex-partner that details how your property, superannuation, and financial resources will be divided. BFAs must meet strict legal requirements, as each party is expected to get their own legal advice independently of one another before signing it. While BFAs offer flexibility, they can sometimes be challenged if they are not properly drafted. Our lawyers will be able to help you create a BFA, and they will liaise with your former partner’s lawyers, so all legal avenues are addressed promptly and properly.
Without formal documents, your financial settlement isn’t final. This means:
- Future claims can be made against you.
- Changes in circumstances (such as winning the lottery, inheriting money, or building up assets later) could be used to open new disputes.
- Selling or transferring property can become complicated or even impossible without clear and legally enforceable terms.
At Dam Lawyers, we can help you get through even the most complicated financial separations with clarity, confidence, and compassion. If you’re facing a challenging property settlement or simply need advice about your next steps, contact us today for a consultation.
