Immediately following separation one or both parties may not be emotionally-ready to negotiate the division of assets. If there are points of contention, negotiations may become drawn out or more difficult if emotions get in the way. But you could be waiting years for both parties to be emotionally ready to negotiate. If both parties receive frank and unambiguous legal advice, then often they can be steered towards making good decisions rather than letting anger or disappointment impact their decision making.
If there are children, then holding off on selling a family home can provide them with some continuity post-separation. However, the terms of a Separation Agreement could accommodate this point by, for example, specifying that the family home is to be sold at a particular point in time in the future.
Financial benefits: if the assets continue to be held by both parties post-separation and they increase in value then both parties share in the increase in value when the assets are eventually divided.
The cons
The major difficulty with waiting is that the relationship property legislation allows for either party to be compensated if they have made a post-separation contribution. The legislation is drafted in very wide terms: a party can be compensated for “anything that would have been a contribution” during the relationship.
Common examples of these contributions after separation include:
1. Raising children;
2. Servicing relationship debts;
3. Allowing the other party to reside in the family home; and
4. Maintaining or renovating relationship property.
Given the discretionary nature of this section, it can be difficult to work out which contributions should be compensated, and if they are, to quantify the compensation amount. Also, sometimes different contributions will offset each other. If there is a lack of goodwill between the parties at the time a Separation Agreement is being negotiated then my experience is that this provision can create a minefield.
The reality is also that post-separation relationships between ex-partners can change and not always for the better. It can only take one party, for example, entering a new relationship or making a decision about the child or children that the other does not agree with for the relationship to sour. Hopefully this is not the case, but it is a risk to consider.
Timeframes to be aware of
Some relevant timeframes to be aware of are as follows:
1. You need to have been separated for two years in order to apply for a divorce. However, you don’t need to be divorced to take steps to divide relationship property / sign a Separation Agreement – this can occur immediately after separation.
2. If you do get divorced, you should have resolved all relationship property matters and have a Separation Agreement signed within one year from the date your marriage has been dissolved as otherwise you will be “out of time” to file Court proceedings (if you need to) and you will need to seek the Judge’s permission to file out of time.
3. You have 3 years from the date of the end of a de-facto relationship to file proceedings in the Family Court regarding relationship property so a Separation Agreement should be finalised before this time.
Conclusion
The more time that goes past since separation, the more chance of an argument about the house valuation, occupational rent and other adjustments. Keep it simple. A new partner also can cause issues in any settlement.
Jeremy Sutton is a senior family lawyer, specialising in divorce cases where there are significant assets, including family trusts and complex business structures.
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