How Splitting Finances Works
Going through a separation can be overwhelming and important things may be overlooked.
Here is an overview of how the division of assets and debts works.
Dividing Everything
When you separate, it’s important that you divide all your finances. This means, you can’t continue owning assets and debts jointly with your partner in the long term.
This is not just a suggestion. The law requires the court, as far as practicable, to end the financial relationship between you.
If you continue owning assets and debts with your former partner, there is a higher chance of a dispute happening in the future. The whole purpose of the property division is to finalise your split for good, now, and avoid future disputes. You need to have a clean break.
Owning debts with your former partner is risky. With joint debts, you’re both ‘jointly and severally liable’. This means you’re both 100% responsible for the debt. So if your partner doesn’t pay their share, the lender can go after you for the whole amount.
You should separate your assets, so you can continue building your own wealth independently of your partner. That way you get to keep the increase in asset value. If you own an asset with your former partner, you don’t want to get in arguments about who gets to keep the gains in asset value and who did the work for it etc.
This is why you need a complete division of your finances. This may include things such as:
- Real estate
- Money
- Bank accounts
- Shares/Investments
- Superannuation
- Motor vehicles
- Business interests
- Furniture
- Other valuable assets
- Mortgages
- Credit cards; and
- Personal loans
How The Split Works
In Australia, it is not automatically 50/50. The way that the assets of the relationship are divided depends on a number of different factors including:
- How much each person contributed financially at the start of the relationship,
- How much each person contributed during the relationship,
- Contributions to the finances after the relationship ended,
- Who took care of any children,
- Any non-monetary work conducted by each person (for example, gardening, renovations, contributions to any family businesses),
- Contributions from inheritance, parents,
- Age (for example, time left in the workforce),
- Future income earning potential,
- Health conditions,
- For married couples (since 10 June 2025), the economic effect of any family violence and any wastage of assets, and
- A variety of different factors.
Making It Legally Binding
If you reach an agreement with your former partner about dividing your assets, it is important that you make that agreement legally binding.
If you don't make that agreement legally binding then each person is free to change their mind. They can potentially seek more money from you later on.
There are only three ways to make the division of your assets legally binding (explained below).
If you both agree and sign a piece of paper, that is not good enough.
Two of the three ways are by agreement. The third is going to court.
1. Consent Orders
Consent orders are a special court document that you both sign (after you’ve reached an agreement). This document is filed with the court.
The court reviews it and, if the arrangement is just and equitable, makes the orders. They are binding from then on.
2. Binding Financial Agreement
A Binding Financial Agreement (BFA) is a special contract that you both sign to divide your assets and deal with other things. Again, you can only do this by agreement.
Each person must get independent legal advice from their own lawyer before signing the BFA. Each lawyer signs a statement (a certificate) to say that they have given legal advice to their client about the agreement.
A BFA can often be more expensive than consent orders. That is why consent orders are normally our preferred approach in dividing assets of the relationship.
3. The court makes a decision for you. The third way to make the division of your assets binding is for the court to make the decision for you, which means one of you will need to start court proceedings.
This can be a stressful and costly process, as you will need to go to trial and the judge will need to make a decision. You can still settle your case before trial, usually by consent orders (so not every case goes to trial).
Starting Negotiations
The best place to start, if possible, is to have discussions with your former partner about how to split your property.
You might need two or three discussions to properly sort everything out. We can assist you and guide you on how to conduct these discussions.
You should make a list of all assets and debts you both have. You can ask for documents such as bank statements and super statements. All assets and debts should be considered, even if only one of you ‘owns’ the asset or debt.
If discussions with your former partner have not been successful, our negotiation package may be suitable for your circumstances.
Find Out What You’re Entitled To
It is important to find out what you're entitled to, to make sure that you don’t sell yourself short in the negotiations.
We can help you understand what is a fair split of the assets. This is usually a range, where solely owned and jointly owned assets and debts are considered.
Time Limits
There is one deadline that you need to be aware of, depending on whether you’re married or not.
If you’re married, there is a deadline of 12 months from the day your divorce order takes effect to divide the property you own with your former partner.
If you were in a de facto relationship, there is a deadline of 2 years from the date you separated to divide the property you own with your former partner.
If you do not get consent orders, a binding financial agreement, or apply to the Family Court of Western Australia in this timeframe, then you may be prevented from pursuing a property division (unless you both consent, or the court gives you permission to apply late).