Are you wondering how mediation for property settlement in a divorce works?
Here’s a few pointers about mediation for property settlement in Australia.
What is a property settlement?
A property settlement is a legal agreement setting out the terms of how a couple’s financial property is divided after separation.
An agreement between parties as to how to divide up their finances after separation is not legally binding or enforceable unless approved as Consent Orders by the Family Court (or, in special circumstances, through the execution of a Binding Financial Agreement – a BFA).
A property settlement can be reached by parties at family mediation, after which it is submitted to the Family Court for the granting of a consent order.
Should the parties fail to reach agreement at mediation, unresolved matters are usually then taken to the Family Court where a judge or Magistrate will make the final ruling.
Where a Binding Financial Agreement (BFA) is in place the terms of that agreement will determine how the finances will be split.
What You Need To Know About Mediation for Property Settlement
What property can be divided?
Property includes all of the assets and liabilities of both parties, regardless of in whose names they are registered.
Assets include bank accounts, real estate including the family home, business interests (held personally or in company names), shares, investments, vehicles, jewellery, all valuables and household items. The definition of “property” in family law includes any superannuation entitlements of the parties (which can be valued under formulas set out in the relevant regulations and legislation).
Liabilities include all debts including credit cards, overdrafts, mortgages, personal loans and outstanding taxes.
All these form part of the net asset pool to be divided between the parties.
You must disclose all financial records
Although family mediation is a voluntary process, all assets, earnings and financial records should be fully disclosed prior to the formal mediation so everyone has the same knowledge.
If it is later discovered that one party has failed to disclose or deliberately valued an asset inaccurately, the Family Court has the power to change the asset split and, in some cases, to issue a costs order against the person who failed to disclose accurately and fully.
Reach an agreement with your ex through mediation
If no BFA is in place, reaching agreement with your ex through family mediation is by far the quickest and least costly way of achieving a property settlement. Unlike proceedings in the Family Court, an appropriately-qualified family mediator will inform parties generally of their rights and obligations and provide guidance to enable them to negotiate a settlement that is appropriate to their needs.
A property settlement can be reached before, during or after a divorce, but it’s highly recommended that you do that as soon as you separate and not wait until the divorce is granted. That is because the values of assets are taken at the time of the settlement and may change significantly over time. Assets acquired after the separation (or liabilities incurred) will also go into the net asset pool.
Know the difference between what you want & what is fair
Your family mediator plays a significant role in ensuring that the parties remain calm and civil towards one another and negotiate an agreement that is just and equitable, as required by Australian family law.
Knowing the difference between what each party wants and what is regarded as fair under the family law, paves the way to an amicable and reasonable settlement.
The future needs for each party will be a factor
Although numerous factors are taken into consideration – which the mediator will explain – the future needs of each party are a major factor in determining a just and equitable property settlement. Be prepared for a lot of give-and-take where you may have to exchange one asset for another to suit your needs.
Other factors that come into play may include the length of the relationship, age, health, earning capacities, financial and non-financial contributions of each party and the needs of your children.
Formalise your agreements with a consent order
Once you have resolved all your disputes and reached agreement the family mediator will draw up a formal settlement agreement, which you may then take to your own lawyer for advice before signing and submitting it to the Court for approval.
If approved by the Court (which will include an assessment as to whether the terms of the agreement are fair and reasonable according to the family law), the agreement will be formalised as a Consent Order and will become legally binding and enforceable.
Get relevant advice from the start
As you have possibly gathered by now, reaching a property settlement can be a complex matter, where many things can go wrong.
Considering the importance of potential consequences, it is recommended that parties obtain relevant advice from the start, whether that’s legal, tax or financial advice.
Are you ready to start family mediation for property settlement?
Get in touch with accredited family mediator Ian Shann at Move On Mediation in Perth today to move on with your life quicker and more amicably.
The attached excerpt from Ian Shann’s book, “Know Where You Stand” may assist in providing some background to property distribution under the family law: https://www.dropbox.com/t/dmLl9nK93yG8W7fc
