At a Glance
- Property settlements in Australia are not automatically split 50/50, even for long-term relationships.
- Both married couples and eligible de facto partners can apply for property adjustments under the Family Law Act 1975 (Cth).
- There are strict time limits: 12 months after divorce is finalised for married couples, and two years after separation for de facto couples.
- The court uses a four-step process to assess fairness, considering financial and non-financial contributions.
- Superannuation can be split as part of a property settlement, even if it's held in one party’s name.
Understanding Property Settlement in Australia
When a relationship ends, dividing assets and debts is rarely straightforward. Unlike popular belief, Australian law does not guarantee an equal division of property. Instead, the Federal Circuit and Family Court of Australia applies a structured approach to determine what is just and equitable in each unique case.
The rules apply to both married couples and eligible de facto relationships, including same-sex couples, provided the relationship meets the requirements under section 90SB of the Family Law Act 1975 (Cth), such as a minimum two-year relationship, the existence of a child, registration of the relationship, or substantial contributions giving rise to serious injustice if no order is made.
The Four-Step Legal Process for Property Settlement
The courts follow a clear and consistent four-step process when determining how property should be divided:
- Identify the asset pool: This includes all assets, liabilities and financial resources owned by either party, whether in their name or jointly held. It covers real estate, bank accounts, investments, vehicles, businesses and superannuation.
- Assess contributions: The court evaluates both parties’ financial contributions (e.g., income, deposits, gifts) and non-financial contributions (e.g., home maintenance, parenting responsibilities, homemaking). A stay-at-home parent may be recognised for their indirect but substantial role in building the family’s wealth.
- Evaluate future needs: Factors such as age, health, income-earning capacity, and primary custody of children can influence how the asset pool is adjusted. If one party earns significantly less or has caregiving responsibilities, they may receive a larger percentage.
- Determine just and equitable outcome: The final decision hinges on whether the proposed division is fair in the context of all evidence presented. This step allows flexibility to account for unusual circumstances.
This framework ensures that settlements reflect the true dynamics of a relationship, rather than applying rigid formulas.
Superannuation as Part of the Asset Pool
One often-overlooked aspect is superannuation. Although it is not immediately accessible, superannuation is treated as property for the purpose of family law proceedings and can be split under a superannuation agreement or court order. For example, in Stanford v Stanford (2012), the High Court emphasised that the court must first determine whether it is just and equitable to make any property order at all, and rejected the assumption that a 50/50 division is automatic.
This landmark decision affirmed that superannuation is not set apart from the broader property pool and must be considered fairly, especially in longer relationships.
Practical Case Example
Consider a couple who married in 1995. One partner worked full-time in construction while the other stayed home to raise their three children and manage the household. Over time, they acquired a family home, investment property, savings and retirement funds.
After separating in 2022, they attempted to divide their assets 50/50. However, legal advice revealed that due to the wife’s extensive non-financial contributions and her lower earning capacity post-separation, a 55/45 split in her favour was more likely to be upheld by the court. They eventually reached a negotiated agreement reflecting this balance, avoiding costly litigation.
This example shows how contributions beyond income play a vital role, and why legal guidance early on can prevent misunderstandings.
Time Limits That Matter
Missing key deadlines can cost you your right to claim. For married couples, you must file an application with the court within 12 months of your divorce becoming final. For de facto couples, the window is two years from the date of separation.
While court applications can sometimes be allowed after these deadlines with special permission, it's never guaranteed. In Bastin v Morris (2014), a man applied five years after separation and was denied leave to proceed because he failed to establish hardship to himself or that refusal of leave would cause injustice, as required under the Family Law Act.. This reinforces the importance of acting promptly.
Agreements Without Court Involvement
Many couples reach property settlements outside of court through:
- Binding Financial Agreements (also known as financial agreements under the Family Law Act): These are formal contracts outlining how assets and debts will be shared. They must meet strict legal requirements to be binding and should be prepared with independent legal advice for both parties.
- Consent Orders: Submitted to the court for approval, these are enforceable and offer a cost-effective alternative to litigation if both parties agree.
Both options provide finality and clarity, reducing the emotional and financial toll of court battles.
A Lawyer’s Perspective: Common Pitfalls
From legal practice, some of the most common mistakes include:
- Delaying action beyond time limits, especially in de facto cases where people wrongly assume they have the same timeframes as married couples.
- Failure to fully disclose assets, such as concealing overseas accounts or transferring funds, can significantly impact the outcome of property settlements. In Weir v Weir (1993), the court emphasised that parties must provide full and frank disclosure of their financial circumstances during property proceedings. Where deliberate non-disclosure is established, the court may draw adverse inferences against the offending party and adjust the division of property in favour of the innocent party. Failure to disclose may result in adverse inferences being drawn, costs orders, setting aside of agreements or orders, and a substantial adjustment of the property division.
- Undervaluing businesses or self-managed super funds, leading to unfair distributions.
- Overlooking tax implications, such as capital gains tax on property transfers.
Good legal advice helps avoid these traps and ensures the process is transparent and lawful.
Key Takeaways
- Property division is based on fairness, not automatic equality.
- Contributions, both financial and non-financial, are assessed carefully.
- Future needs, such as income and childcare, can affect the split.
- Superannuation is divisible and should be included in the asset pool.
- Strict deadlines apply; delays can result in loss of rights.
- Agreements outside court are possible and often preferable when mutual consent exists.
Frequently Asked Questions
Do I have to split everything 50/50 after separation?
No. The law aims for a fair and equitable outcome, not necessarily an equal one. The split depends on the specific circumstances, including contributions and future needs.
What counts as property in a settlement?
Property includes real estate, vehicles, savings, investments, businesses, debts, inheritances and superannuation—even if held in one person’s name.
Can I keep my inheritance?
Inheritances are generally included in the asset pool but may be treated differently depending on when they were received, how they were used and whether they were mixed with joint assets.
What if my ex hides assets?
If concealment is proven, the court can penalise the offending party and redistribute assets more favourably to the disadvantaged party. Full financial disclosure is legally required.
Can I change a property settlement later?
Generally, once a settlement is formalised through consent orders or binding financial agreement, it cannot be changed unless statutory grounds are established, such as fraud, non-disclosure, duress, impracticability, or circumstances causing hardship under the Family Law Act.
How We Can Help
We support individuals navigating property settlements with practical, client-focused legal services, including:
- Identifying and valuing the full asset pool, including complex assets like businesses and superannuation.
- Advising on the best pathway: negotiation, mediation or court action.
- Drafting and reviewing Binding Financial Agreements.
- Applying for Consent Orders with the court.
- Representing clients in hearings where agreement cannot be reached.
- Addressing allegations of hidden assets or financial misconduct.
With early intervention and clear strategy, we help clients achieve fair outcomes while minimising emotional stress and legal costs.
