Your ex has a new partner – how does this affect your property settlement?
Sometimes, working things out after a separation or break-up isn't a walk in the park. For de facto couples, you have a window of 24 months from the date of separation to sort things out. For married couples, the timeframe is 12 months from the date of divorce. However, since married couples are required to wait for 12 months after separation before becoming eligible for divorce (and even then, some people don’t formalise their divorce), they often have a bit more time to tackle these issues. Whilst some people wait before they finalise their property relationship, life goes on.
Perhaps you’ve fallen hard for your new partner and want to move in together, buy a home or have a child. What happens then? How will this impact on your entitlements or your ex’s entitlements to your property?
Or is it that your ex has found a new partner, is moving quickly and you are concerned how that will impact your financial entitlements? Coming to terms with your ex-partner's new relationship and their ability to move on can be emotionally challenging. In either case, it's crucial to understand your legal rights and what you may be entitled to in such circumstances.
Sometimes, it is not always easy to work things out after separation. An experienced family lawyer can help you work out the best and most effective way of getting to a final resolution, including which pathway best suits your situation.
How is a property settlement worked out?
The process of resolving a property matter in family law is clear. The first thing to understand is whether or not a property settlement needs to happen. This requires a stock take of the property owned by each party as individuals and together, and an understanding of how you managed finances during your relationship. A family lawyer can help to unpack this with you and give you some clarity about whether or not a financial agreement or separation agreement is warranted in your situation.
If a property settlement is required, then the first step is to identify the assets of the relationship – the property pool to be distributed between the members of the couple. The second step is to consider the contributions made to that property pool – whether they be contributions of a financial or non-financial nature or contributions to the welfare of the relationship. The third step is to consider the ‘future needs’ of the parties. Lastly, the Court will consider whether an adjustment to the legal entitlements of the property pool is just and equitable. Each of these steps will have an impact on the ultimate outcome.
Property pool – assets of the relationship
To determine the property pool, the Court will look at the assets held by both you and your former partner. This includes your legal interests (for instance, your name being on the title for a house)
or any equitable interests (for instance, if you have a beneficial interest in a property and that interest is held on trust for you). An equitable interest is always much harder to argue – but if your former partner pays for a deposit for a new house but does not go on the title, their interest may be included in the property pool if you can prove an equitable interest is held by them.
If you and your new partner decide to invest in property together, it is wise to get some advice about the risks of that investment before doing so. You would not want your former partner to cause a risk to the new life, and home, you are building together.
If your former partner has purchased a new property, it will be important to establish where the money for the property came from. If it has come from assets held by the two of you during your relationship, then it may be more relevant than if it has been purchased using sources of money or income from outside your relationship property pool.
It is possible that neither of these scenarios will neatly apply – because relationships are often not clear cut as to when they start and end. If a financial relationship has not been severed (with a property adjustment being formalised) before new property is acquired, the waters can be muddied. The complexity this brings – and the weight the Court may give to the amount of contribution – is a difficult question and requires skilled legal assistance. You can read our blog about why it is important to ensure you legally formalise your property settlement, and the risks of not doing so here.
If your former partner has a new child in a subsequent relationship, this may impact your entitlement to the property pool. The Family Law Act instructs the Court to consider your former partner’s commitments to maintain the new child. The Court is also instructed to consider the standard of living of your new partner, which is likely to be lower, given they have another mouth to feed.
Offsetting this is that the Court may consider the financial circumstances of your partner’s new relationship. As a further concern, if your former partner and their new partner separate, your former partner may be required to pay child support – the payment of which is a factor the Court must consider.
These scenarios can (of course) go the other way in the event you re-partner and have a child, or intermingle finances with your new partner. These are factors the Court and place weight on and which may affect the percentage you are entitled to receive from the property pool based on contributions alone.
Just and equity
The Family Law Courts have acknowledged, many times, that the qualitative considerations of contributions and future needs of the parties require a ‘leap’ to the quantitative evaluation. That is, there is a ‘leap’ from words (the contributions) to numbers (the final just and equitable adjustment).
We recommend obtaining legal advice about the steps you can take to minimise risk when entering or exiting a relationship, including in relation to your property and financial affairs. Our family law experts can provide tailored advice to consider your circumstances (and your ex partner’s!) to provide clarity.
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