How Does Property Settlement Work in Australia?

Clarity Family Lawyers Property Settlement Australia

A lot of change occurs when a marriage or de facto relationship ends. From new living arrangements, to changes in parenting, you also need to get used to no longer spending time or seeing your former partner as regularly, if at all.

While each of these things have their difficulties, one of the most challenging aspects of the end of a long-term relationship or marriage, is working out how you will divide your assets.

For some people, deciding who gets what is easy, for others, it results in a contentious battle that is just exceptionally difficult to resolve, and then there are some other people who have no idea where to begin.

In this article, we’re going to discuss property settlements and give you an overview of what needs to be considered in a property settlement and how the process works.

What exactly is a property settlement?

A property settlement is essentially a final agreement between the former partners that records how the assets and property of the people involved are to be divided. Included in the property settlement are liabilities like debts and loans, as well as assets that were acquired together and individually.

It’s common for people in long-term de facto relationships and marriages to combine their finances or to share many things, so the property settlement is basically a way to officially end the financial relationship – similar to the way a divorce order is the way a marriage is legally finalised.

Many people actually think that the divorce is a property settlement or vice versa, however, it is a consequence of a divorce or ending a relationship.

Aren’t we meant to split everything 50/50?

It’s a common for people to think that when you divide assets, everything should just be split down the middle, however, while this may work for some people, there are a wide range of factors (which we will discuss shortly) that need to be taken into consideration when working out a property settlement and a 50/50 split may not be appropriate.

Property settlements must be “just and equitable” according to the family law system in Australia – so it is extremely important that these factors are considered.

How are assets divided in a property settlement?

Working out who will get what in a property settlement can happen in many different ways. You might be able to make a simple list and decide quite easily, however, this doesn’t work for everyone.

There is a common 4 step process that is used in the Australian family law system when it comes to working out a property settlement. This process is used by the Court, however, it is a good guideline for anyone working out a property settlement. The 4 steps are outlined below:

Step One: Identification of assets, property and liabilities

In order to divide everything fairly, you need to be aware of everything. It’s recommended that a list of every asset, property and liability is created. This list should include assets owned by the parties involved individually, as well as those owned together. It should also include assets that were acquired before, during and after the relationship ended.

It’s important for each party to be honest and transparent in this stage as failing to disclose all information could have serious consequences in the future, including having previous agreements overturned.

We will include a list of assets and liabilities that should be considered shortly.

Step Two: Work out the contributions to the relationship of each party

Contributions to a relationship are a lot more than just financial ones. While one party may have earned more money or provided for the other party financially, the other party may have been the primary carer of the children. These are both considered to be contributions.

Contributions can be financial or non-financial and they can be direct or indirect. They are also much more than tangible items.

Besides money and parenting, other contributions could be maintenance of the home, renovations, or work done in a business owned by one or both parties to the relationship.

Step Three: Consideration of each party’s future needs

It’s important that the current and future needs of each party are considered as part of the process as one party may have their ability to earn an income impacted by factors such as parenting, health, and age.

The combination of contributions and the needs of each party will influence the percentage share that each party is entitled to.

Step Four: Reviewing the agreement

To ensure that the above steps have taken place, the agreement should be reviewed to ensure that the various factors we listed above have been considered and the agreement is fair or “just and equitable”.

How can you decide your property settlement?

As we touched on above, working out a property settlement can happen in many different ways and there are many resources available to people in Australia in order to do so.

Below we have listed some of the different ways a property settlement agreement can be made:

Privately between the parties

In some situations, it may be easy for the former spouses to decide how they will divide their assets. They may follow a similar process to the one mentioned above, or they could pick the assets out of a hat if they wanted to.

The agreement made in this situation can be informal or formalised by creating a binding financial agreement or applying to the Court for a consent order. If you choose to formalise your property settlement agreement in one of these ways, you will need to seek legal advice to ensure you understand the agreement you’re entering. However, we recommend seeking legal advice even if you wish to keep the agreement informal – that way you can ensure that you’ve taken all factors into consideration.

Engaging legal help

Working with a lawyer is a common way for people to cerate property settlement agreements. A property settlement can be complicated, and as you have likely to have noticed, there are a lot of things that need to be considered.

By choosing to work with a lawyer, you can ensure you’ve covered all of your bases and they can help to formalise agreements, or they can negotiate for you as well.


Sometimes it’s not possible to come to an agreement right away or without some help, and this is where a service like mediation may be a great option.

Mediation involves an impartial third party who essentially helps to facilitate a conversation and negotiations between parties. They can also ensure that each person’s voice is heard, and their concerns are acknowledged and addressed.

When you’re going through a separation or divorce, it can be difficult to communicate with someone, even if the decision to end the relationship was mutual, but mediation provides an option to facilitate communication.

Apply to the court

Sometimes it’s just not possible to reach an agreement for a property settlement using any of the above processes, and when this occurs, the parties can apply to the Court for property settlement orders.

The Court will use the same 4 step process we outlined earlier in order to make their decision. While they will do everything they can to ensure a “just and equitable” property settlement, you do lose control over the outcome of the property settlement and the Court’s orders are final.

The Australian family law system promotes the idea of people resolving their matters outside of Court to ensure the process isn’t overly elongated and the parties can retain control over the situation, so Court is seen as a last resort.

What assets need to be divided?

We mentioned earlier that a property settlement includes, property assets and liabilities, but what does this mean exactly? Below we’ve listed some of the most common types of property and liabilities that need to be considered during your property settlement:

Assets / Property

  • Family home (if owned by the parties)
  • Real estate, like land or property
  • Buildings
  • Investments, including shares and stocks
  • Money, including cryptocurrency
  • Superannuation
  • Inheritance
  • Cars and vehicles, including boats and motorcycles
  • Jewellery
  • Art


  • Mortgage
  • Loans, including car and personal loans
  • Credit cards

Please note that this list isn’t exhaustive, however, we’ve tried to include the most common assets and liabilities.

Who is entitled to a property settlement?

Many people believe that a property settlement is only for couples who were married, however, under the Family Law Act 1975 (Australia’s family law legislation), both married and de facto couples have rights to a property settlement in Australia.

For a de facto couple to be eligible for a property settlement they need to have either had a child together, the relationship was registered in their state or territory, or the relationship lasted for at least 2 years.

A de facto property settlement and a marriage property settlement are almost identical and it’s important to note that de facto and married same-sex couples also have the same entitlement to a property settlement too.

Are there time limits for property settlements?

The time it takes to sort out a property settlement will vary from situation to situation, however, there are time limits for when parties can apply to the Court for property settlement orders.

It’s important to be aware of these time limits as applying to the Court for property settlement orders is meant to be a last resort measure after trying to resolve the matter privately and through mediation.

For married couples, they have until 12 months after the date the divorce orders have come into effect to commence property settlement proceedings, while de facto couples have up until 24 months after the date of separation.

In exceptional circumstances it may be possible to apply for property settlement orders outside of this timeframe, however, to do so, you will likely need to engage the services of a family lawyer.

Are there any ways that I can protect my assets?

There are steps you can take in order to protect your assets in the event of a relationship breakdown.

A prenuptial agreement or a binding financial agreement can help you to protect your assets by outlining what will happen to certain assets and property if the relationship were to end.

A prenuptial agreement is formally known as a binding financial agreement and can actually be made at any point of the relationship, not just prior to marriage.

While a binding financial agreement can provide peace of mind and is generally enforceable, it’s important to note that it is possible for these agreements to be overturned, such as if the agreement was made under duress or the provisions are unjust.

If you’ve entered into a prenuptial agreement or binding financial agreement and you’re concerned with its validity, we highly recommend seeking legal advice.

Do you have to work with a lawyer to work out a property settlement in Australia?

Like many other family law matters, a family lawyer is not required to create a property settlement agreement, however we advise that you do talk to one.

Working with a family lawyer in any family law matter, not just a property settlement, ensures you know where you stand and all of your options. You can simply talk to us for initial advice, or we can work with you until your matter is fully resolved.

In some situations, you will need a lawyer, such as if you are entering into a binding financial agreement, as you must get independent legal advice to ensure you understand the agreement. However, keep in mind that separating from someone and having to resolve these various life changing matters is challenging and a family lawyer can provide you with guidance and support to help make it a lot easier for you.

Do you need a property settlement lawyer in Australia?

If you’ve recently separated and you’re working through a property settlement or any other family law matter, here at Clarity Lawyers, we’re here to help you.

Our family law team is based in Newcastle and Maitland; however, we provide our services Australia-wide.

We understand that being involved in family law matters is stressful and often overwhelming and we pride ourselves on ensuring that our clients know all of their options and are supported throughout their entire matter.

Call us today on 02 4082 6828 or book in a free, no obligation consultation with us today.


Frequently Asked Questions

What specific steps should one take if they believe their former partner is not disclosing all assets during the property settlement process?

To address concerns about a former partner not disclosing all assets, it’s important to engage a legal professional. They can assist in formally requesting documentation or applying for court orders to ensure asset disclosure. This process helps safeguard one’s interests by ensuring a fair and comprehensive evaluation of all assets during the settlement.


How does the presence of a prenuptial agreement affect the property settlement process, especially if one party contests the terms of the prenup?

A prenuptial agreement can significantly influence the property settlement process. If contested, the court examines its validity, focusing on fairness and adherence to legal standards. The outcome depends on the agreement’s compliance with current laws and its provisions for both parties. Legal advice is essential in navigating these disputes to ensure the agreement is upheld or challenged effectively.


Are there any tax implications associated with the division of assets and property during a settlement, and how can these be minimised?

Tax implications, such as capital gains tax, can arise from the division of assets. Minimising these liabilities involves strategic planning and consultation with financial advisors. Proper structuring of the settlement and understanding tax laws are crucial. A financial advisor can offer tailored advice to mitigate tax liabilities, ensuring an equitable and tax-efficient division of property.


For detailed insights and guidance, consulting with legal and financial professionals is advisable.

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Rli Samantha@2x
Samantha Miller

Samantha has been a lawyer since 2001 having followed in the steps of her father, grandfather, great-grandfather and great-great-grandfather. No one can say she didn’t know what she was getting into!

Initially admitted in 2001 as a solicitor in NSW and Australia, Samantha moved to the UK where she was admitted as a solicitor in England and Wales in 2002. After working in several different areas of the law in large London firms, she determined that family law was her calling and hasn’t looked back.


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