Dividing assets during separation or divorce can be overwhelming, especially if finances are already tight. This is where partial property settlements in family law, which provide access to specific assets or funds while final decisions are still pending, can offer a practical solution.
This article explains how partial settlements work, how they differ from full settlements, and when they are appropriate to help you navigate this challenging period more confidently.
Partial Property Settlement vs. Full Property Settlement
A partial property settlement is an interim agreement where part of the shared property or assets is divided between separating parties before a final settlement is reached. This arrangement provides immediate financial relief without waiting for the conclusion of the overall property division process, which can take a longer time.
A full property settlement, on the other hand, is a comprehensive and final division of all assets and liabilities accumulated during the relationship. It considers the entire asset pool, including real estate, investments, superannuation, and debts. Once finalised, it legally severs the financial relationship between both parties, leaving no room for future claims.
The primary difference lies in scope and finality. For example, in a partial property settlement, a couple might agree to sell and divide a holiday home while leaving decisions about superannuation and investments for later. In contrast, another couple might choose to finalise the division of all assets, including property, superannuation, and debts, closing the financial relationship between the parties in one go.
Why Consider a Partial Property Settlement?
Partial property settlements are not suitable for every situation. They are most appropriate when:
- Both Parties Agree: Mutual consent reduces the risk of future disputes.
- Urgent Financial Needs: Immediate access to funds is necessary for daily living or legal costs.
- Clear Asset Division: The assets or funds in question can be easily separated without impacting the valuation of the remaining property pool.
However, like any legal decision, they can come with some risks. These include:
- Unfair Distribution: Without careful planning, one party might receive more than their fair share early on, complicating the final settlement.
- Legal Complexities: Interim agreements can be legally complex. Mistakes can impact the final settlement outcome if not carefully structured.
How Partial Property Settlements Can Help
Here are some examples where a partial property settlement can be beneficial to a more streamlined full settlement process.
Immediate Financial Needs
Separation often brings unexpected financial challenges. A partial property settlement allows access to funds or assets to cover living expenses, legal fees, or debts while waiting for the full settlement.
For example, if one partner needs funds for urgent medical expenses or to rent a new place quickly, they might agree to liquidate an investment account and split the proceeds.
Lengthy Proceedings
Family law cases involving significant assets or disputes can take months or even years to resolve. Besides providing interim financial relief, a partial property settlement can also reduce the number of assets involved in the full settlement, which should help make the process less complex and drawn out.
For instance, in a lengthy divorce case involving multiple properties, a couple might agree on the division of smaller assets such as a car or cash savings so that a full settlement can be completed more quickly.
Reducing Conflict
Resolving specific financial matters early can ease tension and foster a more cooperative environment for the final settlement.
For example, a couple agreeing to split access to a shared savings account for immediate expenses might prevent disputes over meeting their daily financial needs in the meantime, reducing overall stress and animosity.
Legal Framework in Victoria
In Victoria, family law property settlements, including partial settlements, are governed by the Family Law Act 1975. The court’s primary focus is ensuring fairness, and it does so by considering factors such as financial and non-financial contributions along with each party’s future needs.
Key points to consider:
Approval Requirements
A partial settlement is not automatic. If the matter is before the court, both parties must agree, or the court must approve it to ensure neither party is disadvantaged. Seeking legal advice from a family property dispute lawyer is crucial to navigating this process and protecting your interests.
Binding Financial Agreements
Couples can formalise partial settlements through binding financial agreements (BFAs), which must meet strict legal criteria to be enforceable. These agreements outline how the assets are divided and protect both parties from future claims on the agreed-upon assets.
Steps to Pursue a Partial Settlement
- Assess Your Needs
Identify why a partial settlement is necessary and what specific assets or funds are involved.
- Seek Legal Advice
Consult a family property dispute lawyer to understand your rights and obligations and ensure the partial settlement aligns with your overall financial goals. They can help draft legally sound agreements.
- Negotiate with the Other Party
Aim for an amicable agreement. Mediation may help resolve disagreements without court intervention.
- Formalise the Agreement
Ensure the partial settlement is documented and, if necessary, approved by the court.
Start Your Path to a Fair Settlement With Nevett Ford
Partial property settlements offer a practical solution during separation or divorce, providing immediate financial relief and reducing conflict while navigating the broader family law property settlement process. However, they come with legal complexities and potential risks. Understanding these intricacies and seeking professional guidance ensures a fair and legally compliant outcome.
If you need a skilled and compassionate family property dispute lawyer to guide you through your partial or full property settlement, Nevett Ford is here for you. Our experienced team is dedicated to protecting your interests and helping you achieve your financial goals, all while offering the support and understanding you need during this challenging time. Contact us today to learn how we can assist you.