Why You Should Always Formally Finalise Your Financial Relationship

Formally Finalise Your Financial Relationship

This is why it is important to formally finalise your financial relationship when your relationship is over…

In a recent case, the Full Court of the Family Court of Australia (i.e., the appeal court) allowed a wife to pursue a property settlement some 18 years after she and her husband were divorced. Generally, if you and your spouse cannot reach an agreement, you must commence an application for property settlement within one year of divorce or two years of separation if you were in a de facto relationship.

Around the time of the divorce, the wife kept the car (worth about $10,000 at the time) and the husband kept the house (with only about $15,000 equity at the time). Although the house was in joint names, in the 18 years since divorce, the wife had not made any financial contributions to it. The parties never formalised their agreement or took the matter any further. They went their separate ways and the husband remarried.

However, because neither party took any steps to finalise their financial relationship the court said it would cause hardship to the wife if she was not permitted to commence proceedings, even though she was 18 years out of time. As you can imagine, during that period, the value of the property had increased significantly.

This case highlights the importance of finalising your financial relationship with your spouse as soon as possible once your relationship has broken down. An informal agreement is just that – informal and will not be enforceable or effective in finalising the financial relationship between you. It is important to properly finalise your financial relationship with your ex even if you don’t have property in joint names as even property in your sole name is taken into account for family law purposes. Finalising your financial relationship does not have to be difficult; you just have to ensure your agreement is formalised properly and in the correct terms so it is valid, enforceable and protects you now and in the future at law.

If you wish to read the full judgement referred to above, please click here or on the following link: http://www.austlii.edu.au/cgi-bin/sinodisp/au/cases/cth/FamCAFC/2015/219.html?stem=0&synonyms=0&query=slocomb

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