Family breakdowns are never easy. Whether you’ve experienced one personally or know someone who has, separation and divorce bring emotional, financial, and legal challenges. Unfortunately, in the world of online content at our fingertips, misinformation about property settlements is widespread, often causing unnecessary stress and confusion.
Every family law situation is unique, and it’s essential to have accurate legal advice before making any decisions about your future. It's important to remember that every jurisdiction has different requirements timeframes and rights, and what you hear online may not be accurate for your circumstances.
Let's break down five of the most common myths surrounding family law property settlements, so you can separate fact from fiction.
Important Note: This article details the rules, regulations and legal rights and obligations relevant to Queensland, Australia.
Myth 1: 'Prenuptial Agreements' Don't Exist In Australia
Binding financial agreements (BFAs) are Australia’s version of what is commonly referred to as a 'prenuptial agreement'. They are a practical solution that allows you and your partner to decide, in advance, how assets and finances will be handled in the event of a relationship breakdown.
These agreements are commonly used:
Before marriage or moving in together
During a relationship or marriage
After separation to avoid Court disputes
When properly drafted and executed, BFAs can provide clarity and financial security, reducing the risk of costly legal disputes. However, both parties must receive independent legal advice to ensure the agreement is enforceable.
Myth 2: If I Owned It Before The Relationship, It’s Automatically Mine After Separation
Just because you owned an asset before your relationship does not mean you will automatically retain it after separation.
The Federal Circuit and Family Court of Australia will consider all contributions, financial and non-financial, when determining a property settlement. This means that assets brought into the relationship can still be subject to division.
However, in short relationships, the Courts may give greater weight to initial contributions. In longer relationships, assets often become more intertwined and difficult to attribute to only one person, and contributions (such as the upkeep of the home and childcare) are considered just as valuable as financial contributions.
Myth 3: Property Settlements Are Always 50/50
There is no automatic rule that says assets must be split evenly between separating partners.
The division of property depends on various factors, including:
The length of the relationship
Each party’s financial contributions (e.g., income, property ownership)
Each party’s non-financial contributions (e.g., parenting, homemaking)
The future financial needs of each person
Whilst a long-term relationship may result in a more equal division of assets, every case is assessed individually.
A 50/50 split is not the default outcome.
Myth 4: You Must Be Divorced First
You do not need to wait until a divorce is finalised to begin negotiating your property settlement.
Once you and your partner separate, you can immediately start the process of dividing your assets. It's important to remember that there are strict time limits that apply:
Married couples must finalise their property settlement within 12 months of their divorce being granted
De facto couples have 24 months from the date of separation to settle their property matters.
If you don’t finalise your settlement within these time limits, you may need to seek special permission from the Court.
Myth 5: Assets Held In A Company Or Trust Are Automatically Safe
Holding assets in a company or trust does not always exclude them from a property settlement.
The Federal Circuit and Family Court of Australia have the power to examine assets held in trusts or companies, especially if one partner controls the entity, when making a decision. If the Court finds that a party has effective control over the assets, they can be included in the property pool for division.
This means that even if assets are held in a company or trust, they may still be subject to a property settlement. Engaging a reputable and experienced family lawyer can ensure that any assets that must be protected are placed into the correct structures to mitigate risk prior to the breakdown of a relationship. Better still, when creating trusts, registering companies or other structures, consider getting proper financial and legal advice to ensure it is meeting your needs.
Get the Right Legal Advice
Every family law matter is unique, and the myths above are just some of the common misconceptions we see when meeting with potential clients. The Courts assess property settlements based on individual circumstances, ensuring a fair and just outcome for all involved.
If you are going through a separation or divorce, obtaining proper legal advice is crucial. At RHC Solicitors, our experienced family law team can guide you through the process, helping you make informed decisions about your future.
We also offer a free no-obligation 30-minute discovery consultation to understand your particular circumstance and how we can help. Contact us today to book a consultation and ensure your rights and assets are protected.
Disclaimer: This publication is not intended to be comprehensive, nor does it constitute legal advice. We are unable to ensure the information is current and there is no guarantee in relation to accuracy. You should seek legal or other professional advice before acting or relying on any of the content of this publication. The views and/or opinions expressed in this publication is that of the author and may not necessarily represent the views and/or opinions of RHC Solicitors.
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