Separation, Property and Death – the crucial first steps to take in order to protect your property after a relationship breakdown…
Parties to a marriage or de facto relationship are generally entitled to a property settlement following separation, as provided for in the Family Law Act (1975). This is the case regardless of whose name property is held in. An adjustment of each person's respective interest in property is permitted pursuant to the Act.
Identify joint property – ASAP
It is advisable to know the financial circumstances of both parties and to gather all documentation and information relevant to property ownership as soon as possible. For example:
- What are the assets – obtain bank statements, share statements, title searches;
- What debts are attached to these – obtain credit card/home loan statements; and
- What income is derived by both parties?
Once this information is known, a decision can be made regarding whether any steps need to be taken to preserve your interest in any property.
Now turning to real property...
What if the title is in my spouse's name?
If, prior to the relationship, your spouse purchased the home in which you subsequently lived together and the title remains in your spouse's name at the date of separation, your spouse is not necessarily solely entitled to the home. Neither does this dictate who should stay in the home following separation.
What if both our names are on the title?
This is similarly the case where both of you have a specific legal interest in the property, for example both of you appearing on title as joint proprietors or tenants in common. Just because two people are listed as joint proprietors which, pursuant to property laws, entitles each to an equal share in the property, does not mean each party is entitled to 50% of the property (if any at all) under the Act.
Lodge a Caveat – how unquantified interests can be protected
If your name does not appear on the title of the home, but you have a claim for property settlement and an interest in that property, any unquantified interest can be protected such that the other party (the sole proprietor) cannot sell or transfer the property and 'pocket' or otherwise disburse the sale proceeds. Securing any such interest, by caveat, is relatively simple. It can be lodged as urgently as may be required against the title to the home with the Land Titles Office.
If you and your spouse are registered on title as joint tenants/proprietors, the property automatically passes into the ownership of the surviving spouse in the event of either party's death, notwithstanding that you may have separated. The rules of survivorship apply unless:
- There has been a formal property settlement between the two spouses; or
- Court proceedings pursuant to the Act have been commenced.
If you have separated from your spouse, you may no longer desire for them to be entitled to any interest you have in the jointly held property. This is a problem particularly for couples where one or both parties have children from previous relationships whom they wish to provide for in their Will, as the interest in that property will not form part of the deceased estate. Consequently, any benefit the children would have otherwise received will instead pass to the former step-parent.
Why you need to update or make a valid Will as soon as possible after separation
If you are separated but yet to be divorced, and have not made a valid Will, your legal spouse is likely to be deemed to have the greatest single interest in your estate. This is problematic even if there is no joint property. Alternatively, any valid Will you have made may no longer reflect your testamentary wishes or the change to your circumstances. It is therefore advisable to execute a valid Will as soon as possible after separation.
Separation and death are not generally events that we can or want to foresee and it's important to know what the crucial first steps are that you should take in order to protect your property interests following a relationship breakdown. Our family lawyers and wills and estates lawyers can help. Contact us on 9550 4600.