Property matters are an important consideration after a separation in New South Wales (NSW). However, there are some mistakes parties often make that can result in delays and increased costs. When you know what to look out for, spouses and de facto partners can more easily avoid these pitfalls. Here are some common errors that are made during property settlement proceedings.
Key takeaways
There are generally deadlines for family law property orders.
Non-disclosure may cause a financial agreement to be set aside.
Superannuation interests are divided based on each party’s contributions and future needs.
Non-disclosure in property proceedings may lead to various consequences.
The economic impact of family violence should be considered in property settlements.
Improper assessment of a party’s future needs may result in unfair settlements.
Informal property arrangements can lead to future challenges.
Being unaware of tax implications may lead to higher CGT costs.
Mishandling companion animals in property settlements can lead to emotional distress.
Time limits for property orders after separation
Depending on how you wish to organise your financial matters, there may be a deadline to consider. For financial or property orders, the following deadlines may apply:
If you were married, you generally have 12 months from the date your divorce order takes effect to apply to the Court for property orders.
If you were in a de facto relationship, you generally have 2 years from the date of separation to apply to the Court for property or financial orders.
If you miss this deadline, you may not be able to apply for property orders without the Court’s permission. Under section 44 of the Family Law Act 1975 (Cth), the Federal Circuit and Family Court of Australia (FCFCOA) may grant leave to apply out of time, but only in limited circumstances. The test for leave is not straightforward and depends on your individual circumstances. You should get legal advice about your matter.
Trying to settle without identifying the total asset pool
It’s risky to enter a binding financial agreement (BFA) without identifying the entire property pool first. Even if the agreement only relates to particular high-value assets, it’s important to understand all financial details. This may include:
Bank accounts.
Stock portfolios.
Investment properties.
Financial resources, such as a testamentary trust.
Personal debts.
Mortgages.
If a party hasn’t been fully open about their financial position, there could be a property settlement dispute later on. Reasons why the FCFCOA may set aside a BFA for inadequate disclosure include:
The agreement is found to have been arrived at fraudulently due to non-disclosure of a material matter. Omitting certain assets may lead the FCFCOA to believe that one party is attempting to gain an unfair advantage.
A BFA may be set aside on limited grounds set out in the Family Law Act 1975, which can include where the agreement was obtained by fraud (including non-disclosure of a material matter). Whether a BFA can be set aside depends on the facts and the specific ground relied on. You should get legal advice.
A binding financial agreement must meet specific requirements under the Family Law Act 1975 (Cth), including that each party receives independent legal advice before signing. Other formal requirements also apply. Working with your lawyer can also help to ensure that full disclosure is made.
Assuming superannuation is split 50/50
The rules around superannuation splitting can be complex. If superannuation is included in the settlement, there are different ways that it can be managed. For example, a party may receive a lump sum payment or get a percentage of each payment once the superannuation interest enters the retirement phase.
There is no fixed percentage split for superannuation. The Court considers a range of factors set out in the Family Law Act 1975, including the property and financial resources of each party, contributions, and current and future circumstances. Outcomes depend on the facts of each matter. The division will depend on the parties’ circumstances.
Missing the duty of financial disclosure in the Family Law Act
Under Australian family law, property settlement cases generally need to be based on an accurate determination of each party’s financial circumstances. This can involve producing bank statements and other documentation. If a party fails to fully disclose their finances, they may face serious consequences, including:
Facing a costs order to pay the other party’s legal expenses.
Having the property settlement set aside.
The FCFCOA may make an adjustment to the financial order to account for the breach.
Understanding common myths about family law property settlements can help you navigate the disclosure process more effectively.
Overlooking the economic effects of family violence
Changes to the Family Law Act 1975 (which commenced 10 June 2025) make economic or financial abuse an express part of how family violence is considered in property matters. This has implications for how the FCFCOA approaches family law property cases. The Court considers:
Direct financial contributions.
Indirect financial contributions.
Non-financial contributions.
Family violence is now considered when assessing each party’s contributions to the relationship, and when assessing each party’s current and future circumstances.
If you or someone you know is experiencing family violence, you can contact 1800RESPECT on 1800 737 732. In an emergency, call 000.
Ignoring future needs factors
The future needs of the parties can be crucial to getting a just and equitable adjustment. Relationship breakdowns often don’t impact each partner’s finances equally. The FCFCOA will consider various factors affecting the parties, such as:
Future earning capacity.
Age and health.
Caring responsibilities.
Access to finances.
If future needs are not adequately considered, the resulting settlement may leave one party in a more difficult financial position after separation. Spousal maintenance and child support. are separate from property settlement and have their own rules. Get legal advice about your specific circumstances.
Settling without consent orders or a BFA
Some ex-partners choose to settle their property issues privately. These arrangements may be challenged in the future. For example, one person may transfer funds and certain assets to their former partner, assuming the arrangement will be final. However, the other party may disagree. It can be very difficult to show that an enforceable agreement is in place.
There’s also a risk that one party may enter an unfair agreement without proper advice. Legal oversight can help the parties understand their position and reduce the chances of unfair divisions.
Not considering tax consequences when transferring property
There are various tax implications that couples may face when they separate. Separating couples may be able to access the following benefits, depending on their circumstances:
Relationship breakdown rollover. When a separating couple creates a legally enforceable settlement, the capital gains tax (CGT) that can arise from the transfer of assets may be deferred. CGT may be payable once the receiving party sells the asset.
Main residence exemption. If you were transferred the family home in a settlement, you may be able to claim a full or partial exemption to CGT if you sell it. Refer to the Australian Taxation Office’s website for the eligibility criteria.
Tax outcomes depend on your circumstances and on whether the transfer falls within the relationship breakdown rollover rules. You should speak with a registered tax agent. Outcomes will depend on your tax position. Consider speaking to a registered tax agent for advice specific to your circumstances. For more detailed guidance, read our article on the power of the ATO and family law settlements.
Forgetting that companion animals are now treated separately
Under changes to the Family Law Act 1975 that commenced on 10 June 2025, companion animals are now treated separately from other property. A companion animal is generally an animal kept primarily for companionship, rather than a service animal or an animal kept for business or agricultural purposes.
The amendments allow companion animals to be treated separately from other property. The FCFCOA may make orders for one party to have sole ownership, for the animal to be transferred to the other party, or for the animal to be sold. The Court cannot make an order for joint ownership.
Family pets are a common point of disagreement. Informal arrangements sometimes do not survive disputes over property. This can lead to emotional conflicts between family members. Using appropriate dispute resolution to make formal arrangements for any pets can help former partners avoid unnecessary conflicts.
Conclusion
Dividing property is a common part of the separation process for spouses and de facto couples. But there are a lot of mistakes that can be made along the way. When you know what to watch out for, you can more effectively avoid pitfalls. Many people seek professional help to assist with family law proceedings.
If you have children, it’s also important to consider their wellbeing during this time. Learn more about protecting your children during divorce and parenting arrangements.
Get legal advice
Are you seeking legal advice from a family lawyer? Contact us to organise a free initial consultation.
Disclaimer: This article provides general information only. It is not legal advice. Family law outcomes depend on your circumstances. You should speak with a family lawyer before making decisions about your matter.
References
Family Law Act 1975 (Cth), https://www.legislation.gov.au/C2004A02488/latest/text
Family Law Amendment Act 2024 (Cth), https://www.legislation.gov.au/
Federal Circuit and Family Court of Australia, https://www.fcfcoa.gov.au/
Australian Taxation Office – Relationship breakdown and capital gains tax, https://www.ato.gov.au/individuals-and-families/investments-and-assets/capital-gains-tax/relationship-breakdown-and-capital-gains-tax
1800RESPECT – National Sexual Assault, Domestic Family Violence Counselling Service, https://www.1800respect.org.au/
