Why waiting to resolve your property division doesn't work

Resolving property matters months or years after separation can be even more fraught with issues than resolving it soon after separation. This is because of the practical realities of property matters and how much a time delay can impact on these issues. For example: 

·        The more time that has elapsed since separation the harder it can be to locate important documents – particularly if you have moved house. Furthermore, many organisations, such as banks, law firms, and government departments, destroy their documents after seven years so the necessary evidence may have quite literally disappeared. This does not necessarily mean that resolution will not be possible but it will add to the time it takes to resolve the matter and certainly the costs;

·        If you and your former partner have obtained a divorce – perhaps because one of you wished to remarry – and more than 12 months has elapsed since that divorce order became final it will be necessary to obtain the consent of the Court to commence proceedings for property division or even to resolve your property matters by Consent Order.  Again, this does not mean that division of property will not occur but it will add time and cost;

·        Often after separation one party is left paying the debts of the relationship on their own. These ‘post-separation contributions’ can be recognised in any later division but they are not always recognised in the ‘dollar-for-dollar’ sense and as such the party making the payments may never receive full credit or refund for such contributions. And should there be a lengthy period of time these payments can quickly add up; and

·        One of the factors that the Court can take into account when ordering a property division is what we refer to as ‘future needs/future resources’ – and this means that should one person have managed to pull ahead in life while the other has struggled or stagnated than there may be an adjustment against the person who has done better – even if this has been achieved under their labour and effort.

·        If you choose to transfer your house from joint names to one of you solely right after separation – but don’t finalise your property division for some time – you may also miss out on valuable tax incentives which are available when using one of the legal options. For example, there is an exemption for the stamp duty payable on such transfer if you enter into a legal agreement or have Court Orders made. There is also roll-over relief for CGT should you transfer a property into one of your sole names and that property had previously been used by you as an income earning property.