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Separation Agreements and Property Settlement 101

In this article, we discuss the ins and outs of a marriage separation, and the paths you might take towards negotiating a property settlement.

When we talk about separation we are referring to both de facto or married relationships. We’ll refer to Separation Agreements and Binding Financial Agreements or BFA’s interchangeably. A BFA can be made before, during or after a relationship has ended.

Where we refer to a Separation Agreement we mean a Binding Financial Agreement that has been made after the de facto relationship or marriage has ended.

This article only covers the financial issues with regards to separation. We have deliberately remained silent on issues relating to children because any irreconcilable difference about matters relating to children can only be settled in the court system. If matters relating to children are not a concern for you then read on.

How do we legally separate?

The most common form of separation happens when one party moves to a separate address. However, there may be financial or other reasons that make moving out impractical, such as caring for children or waiting to complete the financial property settlement.

When considering this question – it all comes down to the intention of the parties: One or both of the parties must intend to sever the relationship, and the parties need to physically separate by living separately and apart.

Can you live in the same house and be legally separated?

If you’re both living in the same premises, physically separating usually means moving into separate bedrooms and disentangling finances, for example, by closing joint bank accounts.

The Family Law Act does allow couples to be considered separated even if they live under the same roof. Section 49 defines separation as;

“(1) The parties to a marriage may be held to have separated notwithstanding that the cohabitation was brought to an end by the action or conduct of one only of the parties.

(2) The parties to a marriage may be held to have separated and to have lived separately and apart notwithstanding that they have continued to reside in the same residence or that either party has rendered some household services to the other.”

Watch the video to learn more or click here for another article that explains more about separating under one roof .

What needs to happen after we separate?

If you are a married couple, you will need to wait at least one (1) year after separation before you can file an application for divorce in the Family Court. However you can determine how you will manage the property settlement anytime after separation .

Property settlement for de facto couples is dealt with in the same way as married couples. Both married and de facto couples can choose to enter a separation agreement or apply to the Court for orders for the division of property.

All separating couples, whether they are de facto, married, or divorced, hetero or same sex can settle financial matters peacefully with financial agreements.

De facto Separation Marriage Separation Divorced

Are there time limits to make a claim if separating?

When separating property:

  • married couples have 12 months from the date of their divorce to apply to the court for property orders;
  • de facto couples have 24 months from the date of their separation to apply to the Court for property orders . Download Separation eBook

If parties do not comply with their statutory time limits they are required to seek the court’s permission to apply out of time.  This is not always granted.

There is no time limit to make a Binding Financial Agreement. This means you are not constrained by the time limits above.

What are property orders?

When you apply to the Court for orders, the Court will make a decision on your property and, if included, issues relating to children.  The process is expensive, time consuming and stressful for all involved.

It takes control of the final outcome out of the hands of the parties, as it is the Court that ultimately decides on the issues, and formalises its decision by issuing “property orders” .

What are consent orders?

Consent orders are Property orders made by consenting parties.

If you agree how you will divide your assets and liabilities, you can obtain consent orders by submitting the details of your agreement to the Court by way of an application for consent orders.

The Court will review your proposed settlement, and if it is satisfied that the arrangement is just and equitable, it will consent to your agreement. If the court thinks your proposed settlement is not just and equitable, it will refuse your request.

Alternatively, where a couple agrees on how their property and financial resources should be divided, they can use a binding financial agreement as an alternative to court proceedings.

There is no time limit to make a Binding Financial Agreement .

What are binding financial or separation agreements?

A Separation Agreement is a written agreement that allows you to choose how to divide property and financial resources in the event of a relationship breakdown.

The aim of Separation Agreements is to encourage all couples to agree about how to divide their property in the event of, or following, separation. The main effect of a separation agreement is to prevent either party making an application to the Family Court for the division of assets in a property settlement.

Can we delay the Property Settlement?

While there are no time limits if you choose to make a financial agreement for the settlement of property matters; it’s a bad idea to delay finalising the settlement, no matter how tempting it is to stick your head in the sand about the legalities.

tempting to stick your head in the sand when it comes to separation agreements and property settlement

If you do not finalise the settlement then your are still tied financially to your ex. This means that any financial gains or losses still form part of the joint property pool even after the official separation date.


  • if you win lotto after you move out, your ex could make a claim.
  • if you inherit cash or property after separation, your ex could make a claim.
  • if your partner loses their job, or gets sick, this could affect your share of the property pool or leave you open to a spousal maintenance claim.

The point is that all these factors, whether wins or losses , can affect your joint property pool, and how the pool should be divided.

Another important property settlement factor is your duty to be honest and make full and frank disclosure of all assets and liabilities. Whether you decide to use the court system or a Binding Financial Agreement ( separation agreement ), your obligations to disclose all material matters is unavoidable. More on full and frank disclosure below.

If you think it’s hard to talk to your partner now about money and property, what you each earn, own and owe. Imagine how much more difficult that conversation becomes after you’ve lived apart for couple of years or more . Imagine having that same conversation if a new partner enters the picture.

De facto Separation AgreementMarriage Separation AgreementDivorced Agreement

What is full and frank financial disclosure?

Whether you decide to have your property settlement determined by the family court or you use a separation agreement, both parties have a duty to declare all the relevant information (material matters) to the other party and/or to the court.

In relation to a separation agreement, full disclosure is necessary to ensure that each party is giving fully informed consent to the Agreement . Any information which may have a bearing on a party’s decision as to whether or not to enter into the Agreement, must be disclosed.

If one party tries to hide Assets or Liabilities from the other the agreement will be flawed and vulnerable to a successful challenge on the grounds of fraud or material non-disclosure.

When can a financial or separation agreement be set aside?

It is important to note that a Financial Agreement is essentially a contract. All contracts can be set aside in certain circumstances, for example, as stated above, where agreement has been obtained by fraudulent means.

Section 90K of the Family Law Act sets out the circumstances in which a Court may set aside a Financial Agreement; they are:

  • fraud, including material non-disclosure (e.g. failure to disclose the existence of or the true value of an asset); or
  • that a party to the agreement entered into the agreement for the purpose of defrauding or defeating a creditor or creditors of that party; or
  • that the agreement is void, voidable or unenforceable (i.e. the agreement must be prepared properly and in accordance with the legislation); or
  • that circumstances have arisen since the agreement was made which make it impossible or impracticable for the agreement, or a part of the agreement, to be carried out; or
  • since the making of the agreement, a material change in circumstances has occurred that was not dealt with or foreshadowed in the agreement (relating to the care, welfare and development of a child of the marriage) and, as a result of the change, a party to the agreement will suffer hardship if the Court does not set the agreement aside; or
  • that a party’s conduct in the making of the agreement was, in all the circumstances, unconscionable.

Do you have to pay capital gains tax on property transfers in separation agreements?

If my husband and I separate and the house is transferred to one of us do we have to pay capital gains tax or transfer fees and the like?


Answer: Section 90L of the Family Law Act provides that Binding Financial Agreements are exempt of any charge or duty under any law of a state or territory or any law of the Commonwealth.  This means a general Stamp Duty exemption exists on property transferred between spouse partners.

Relief from Capital Gains Tax is also available on transactions that are the result of relationship breakdown.  The CGT that would otherwise be payable in regards to a transaction made as part of a property settlement is, in effect deferred, or rolled over .  This means that capital gain liability will not arise unless and until the property is sold or dealt with at a later date by the party receiving that property.

The capital gain liability will be calculated from the rise in value of the property from the original purchase date (not the date it was transferred following relationship breakdown).

Therefore whilst CGT will not be triggered and payable as a result of a Transfer of Property from party to another arising from a Separation, it does not mean it is not continuing to accrue, and may at some point in the future be payable on a subsequent Transfer. Specific advice should be sought in this regard.

Some parties may wish to make an adjustment to allow a Capital Gains Tax component when finalising a property settlement, to take into account the eventual CGT that will be payable on the property.

In order to secure this exemption, there must be formal documentation, such as a Binding Financial Agreement or Court Orders, which specifically deals with how to transfer property after separation or the divorce. You will need to provide this document to the Office of State Revenue in order to secure the exemption, along with an exemption form.

You should check with the Office of State Revenue about the specific requirements in your State. Nominal fees will then apply (e.g. $2.00) depending on your State. Registration fees may also apply to file the necessary forms with the Lands Registry in the vicinity of $60.00. Apart from that, the Act specifically exempts transactions from tax and stamp duty.

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Am I entitled to a share of my partner’s superannuation?

For many Australian’s, their superannuation is a significant asset.  As such, it needs to be considered as part of the property pool during a marital or de facto separation.

Part VIIIB of the Family Law Act allows couples to split their superannuation as part of the property restructuring process following separation, meaning super can be divided between separating couples just like any other asset. This applies to married couples as well as de facto couples, including same sex couples.

In order to effect a superannuation split , the trustee of a superannuation fund is empowered to act on the following documents, which detail the split:-

Can I pay my ex partner a cash benefit in lieu of splitting my  superannuation ?

Certainly you can pay a cash amount in lieu of splitting your super.

Couples often opt to pay a cash amount rather than go through the hassle of formally splitting one party’s super because a cash amount can be used now. The transfer of a super interest must be preserved until retirement age, which may or may not be helpful depending upon your circumstances. You will however need to consider the interest you would be paying on any amount borrowed to compensate for the super split.

If you elect to split your super you will need to include provisions in your binding financial agreement which provide instructions for your superannuation fund trustee.

Learn more about Superannuation Splitting Separation Agreements.

Do I need to pay my partner Spousal Support or Maintenance?

spousal support or maintenance

A couple has an obligation to maintain each other, even after their relationship breaks down.

Spousal maintenance is a support payment made to a partner who is unable to support themselves after a separation or divorce.

The likelihood of spousal maintenance being paid, and the extent of the payments, will vary depending on whether one party can actually afford to support the other, and to what extent.

The Family Law Act sets out a list of items that should be considered when assessing whether spousal maintenance should be paid.  It is not a “one rule fits all” scenario, but rather, a set of guidelines to assist in determining whether spousal maintenance payments would be appropriate.

Section 75 of the Family Law Act lists the factors which should be considered when assessing spousal maintenance provisions see this article on spousal maintenance.

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Why do I need to get Legal Advice for a Binding Financial  Agreement?

When you make a financial agreement, that agreement only becomes legally binding after you have complied with the requirements of the FLA (Family Law Act).

The Family Law Act requires each party to the agreement to receive a signed statement from an Australian legal practitioner stating that before signing the agreement, each spouse party was provided with independent legal advice about the effect of the agreement on the rights of that party. This means you need two separate lawyers to provide the legal advice, you cannot use the same lawyer .

In addition, to comply with their duty under S90G or S90UJ of the Family Law Act, your lawyer is require to explain to you the advantages and disadvantages of entering into the agreement.  This means the lawyer needs to explain and you need to consider whether signing a financial agreement is to your advantage or disadvantage.

Once you understand

  • your rights;
  • the rights you give up; and
  • whether it is to your advantage or disadvantage,

you are free to sign the agreement with fully informed consent.

This prevents either party from arguing that, when signing the agreement, they did not understand what they were signing or the consequences thereof.

With this in mind we have negotiated a reduced rate for our customers with several independent, nationally licensed lawyers who can provide the required Legal Advice by telephone and e-mail.

Reviewing your will and estate planning arrangements

As part of the legal housekeeping after separation, you will need to take the time to review your Will.

Most married couples leave their estate to their spouse and appoint their spouse as the executor and trustee under their Will.  Understandably, you will want to revise these arrangements following separation.

In most states, your whole Will, or the parts of your Will that confer specific benefits or powers on an ex-husband / ex-wife, will be automatically void on divorce.  If you want to leave a valid Will that accurately reflects your testamentary intentions, you should

  • Make immediate plans to review and update your Will and estate planning arrangements;
  • Review and update the beneficiaries nominated to receive your life insurance and superannuation benefits.

RP Emery include a Will kit in their binding financial agreement kits.

Can I stop my ex-spouse from benefiting from my estate?

In Australia, we recognise a persons freedom to dispose of assets after death any way they wish.  However, there are limits to this freedom.

Even where you have taken the proactive steps of making a Separation Agreement and a Will, your wishes may still be contested by an eligible person under family provision legislation .

Family provision legislation varies slightly from state to state.  It allows an eligible person to make a “family provision” application to the Court if they have not been provided for in a Will.

An eligible person may be a spouse (including a de facto spouse or ex-husband or wife), child/ren (including adopted and step children), grandchildren or other dependents.

You may in a BFA agree to waive the right of either party to bring a claim under your ex partners estate, by including such provision in the agreement.

De facto Separation AgreementMarriage Separation AgreementDivorced Agreement

How does a Separation agreement affect my will?

A Financial Agreement is an effective tool for couples to determine ownership of assets and/or liabilities of a marriage or de facto relationship.

The Family Law Act states that a Financial Agreement will continue to operate despite the death of a party, in favour of, and be binding on, the legal representative of that party. (Refer to ss 90DA(1A) and 90H for married couples and ss90UF(2) and 90UK for de facto couples).

What this means is that the agreement remains in force despite the death of a party and is binding on the parties estate – essentially dead or alive you are bound to keep your word regarding the financial agreement.

How to apply for a divorce

You can apply for a divorce after you have been separated for at least 12 months, with no reasonable likelihood of resuming married life.  This includes being “separated under the one roof”.

The Family Court supplies a free, online Divorce Kit .  It contains an Application for Divorce, which will need to be completed and lodged at the Family Court.  A filing fee applies at the time you lodge your application.  It can be lodged online, in person, or by post.

Application may be made solely, or jointly. If you make a sole application, you will need to serve a copy of the Divorce Application on your spouse, to inform them that the divorce process has begun.

You will be notified by the Court of a hearing date.  You may need to attend court where you have filed a sole application for divorce, where children are involved or there are other challenging circumstances.  You do not need to attend court where a joint application has been made and there are no children under the age of 18.

Go to download a Divorce Kit from the Family Court .

Looking to the future – protecting your children’s inheritance.

After your divorce or separation is behind you, it is possible that you will enter into a new relationship in the future. This is a decision that should not be made without consideration of the financial implications.

If you decide to enter into another relationship, whether it be de facto or marriage, any property you have accumulated from your previous relationship, may be considered to be part of the property pool of your new relationship after a minimum time period has elapsed.  This means, your new found wealth could become subject to a property settlement claim, should your new relationship come to a natural end after a time.

You can address your concerns about protecting existing assets from a future property claim, by making a financial agreement before you move in together or get married.

A financial agreement (in this case cohabitation, prenup or post nuptial agreement) made with your new partner, will allow you to quarantine your existing assets. This  ensures that they will be kept out of any future property settlement proceedings, and ultimately, be passed down to your existing children.

For younger couples, this may not be an issue.  However, older couples who may not have the time to rebuild an asset base, may wish to protect their assets by implementing a financial agreement (cohabitation) before taking the step of beginning a new de facto relationship or marriage.

Binding Financial Agreements can address many issues, including:-

  • quarantining assets accumulated prior to the relationship started, to provide for existing children;
  • how the assets accumulated by the parties prior to the relationship started are be dealt with;
  • how debts accumulated individually are to be dealt with;
  • how future assets that are acquired together will be dealt with and managed; and
  • how individual and jointly owned property will divided should the relationship break down.

Think of financial agreements as a type of business plan for your relationship or marriage, allowing you to take a pro-active approach to managing and protecting your assets.

The Family Law Act makes Financial Agreements accessible to all couples, to promote private agreement and certainty, thereby minimising any disputes or misunderstanding that may arise in the future.

Watch this Video to learn more about Separation Agreements and finalising your settlement peacefully

Please call us on 0266725904 if we can be of any further assistance – we are always happy to chat about how our products may be of benefit to you, and save you time and money when finalising your property settlement affairs.

De facto Separation AgreementMarriage Separation AgreementDivorced Agreement


This guide is intended to be a short summary of issues you may face during and after separation.

Last Updated 26th March 2019. This article has been Fact Checked By Steve Heptonstall.

Steve Heptonstall – Saxby Munns


Steve Heptonstall Steve has spent over 20 years working in both private practice as a lawyer and the corporate world in a range of roles ranging from General Counsel to Corporate Executive for a number of large multinationals.

Steve Heptonstall has a wealth of experience assisting clients with Business and Commercial Law matters, Property and Conveyancing, Asset Protection and Estate Planning. Other areas of expertise include Mediation in the area of contract disputes and family law matters such as Binding Financial Agreements.

Steve is a member of the Law Society of NSW.

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