What is a Separation Agreement?
A separation agreement is a written document that outlines how separating couples will handle important matters such as property division, spousal maintenance, and arrangements for children. In Australia, you don’t need to be divorced to have a legally binding separation agreement.
Separation vs. Divorce in Australia
It’s important to understand the difference:
Separation
- Can occur while still living together (in rare cases)
- Usually involves living apart
- No court application required
- Can create binding financial agreements
Divorce
- Legal end to the marriage
- Requires 12 months separation
- Court application required
- Changes legal status
What to Include in a Separation Agreement
1. Property Division
Real Estate:
- Who keeps the family home
- How jointly owned properties are divided
- Timeline for sale or transfer
Personal Property:
- Furniture and household items
- Vehicles
- Valuables and collections
Financial Assets:
- Bank accounts
- Superannuation
- Investments
- Business interests
2. Debts and Liabilities
Clearly outline who is responsible for:
- Mortgages
- Credit cards
- Personal loans
- Joint debts
3. Spousal Maintenance
If applicable, include:
- Amount and frequency of payments
- Duration of support
- Conditions for modification
- Method of payment
4. Children Arrangements
While a separate parenting plan is often used, you may include:
- Living arrangements
- Time with each parent
- Decision-making responsibilities
- Child support arrangements
Legal Requirements in Australia
Binding Financial Agreements (BFAs)
To make your separation agreement legally binding under the Family Law Act 1975:
Requirements:
- Both parties must receive independent legal advice
- Each party’s lawyer must provide a certificate
- Agreement must be signed by both parties
- Must meet formal requirements under sections 90B-90D
Without Legal Advice
Separation agreements without independent legal advice are still valid contracts but:
- May not be binding under family law
- Could be set aside by court
- Less protection if disputed
Property Settlement Under Family Law
When dividing property, courts consider:
1. Contributions
Financial:
- Income during relationship
- Initial contributions
- Gifts and inheritances
Non-Financial:
- Homemaking
- Childcare
- Home improvements
2. Future Needs
- Age and health
- Income and earning capacity
- Care of children under 18
- Financial resources
3. Just and Equitable
The court aims for a division that is “just and equitable” for both parties.
Common Property Division Scenarios
50/50 Split
Common when:
- Similar contributions from both parties
- Similar future needs
- Relationship of significant duration
60/40 or Other Ratios
May occur when:
- One party was primary carer
- Significant disparity in earning capacity
- One party made larger financial contributions
De facto Relationships
Separation agreements also apply to de facto couples who have:
- Lived together for at least 2 years
- Have a child together
- Made significant contributions
- Registered relationship (some states)
Timeline for Property Settlement
12 Months for Married Couples:
- Application must be made within 12 months of divorce
2 Years for De facto Couples:
- Application must be made within 2 years of separation
Important: These deadlines are strict. Applications outside these timeframes require court permission.
Steps to Create a Separation Agreement
1. List All Assets and Debts
Create a complete inventory including:
- Property values
- Financial account balances
- Debt amounts
- Superannuation balances
2. Determine Fair Division
Consider:
- Legal entitlements
- Financial and non-financial contributions
- Future needs factors
3. Negotiate Terms
Work together or through mediation to agree on:
- Property division
- Debt responsibility
- Support arrangements
4. Document the Agreement
Put everything in writing with:
- Clear, specific terms
- No ambiguity
- All relevant details
5. Obtain Legal Advice
If you want a binding financial agreement:
- Each party sees independent lawyer
- Lawyers provide certificates
- Agreement properly executed
Enforcing Your Agreement
Binding Financial Agreements
- Enforceable like court orders
- Can be registered with Family Court
- Breach can lead to contempt proceedings
Informal Agreements
- Enforceable as contracts
- May need to sue for breach of contract
- Less protection under family law
When to Seek Professional Help
Consult a family law solicitor if:
- Significant assets are involved
- Business interests need division
- Complex superannuation matters
- Concerns about unfair pressure
- One party is hiding assets
Changing a Separation Agreement
Agreements can be changed if:
- Both parties agree to modifications
- Court orders variation (limited circumstances)
- Original agreement allows for changes
Tax Implications
Capital Gains Tax (CGT)
- Transfers between spouses generally CGT-exempt
- Must occur due to relationship breakdown
- Time limits apply
Superannuation Splitting
- Can divide super without immediate tax
- Must follow specific procedures
- Limitations apply
Conclusion
A well-drafted separation agreement provides clarity and reduces conflict during a difficult time. Whether you’re separating from a marriage or de facto relationship, understanding your rights and obligations is essential.
Need help with your separation agreement? Download our template or consult with a family law solicitor for personalized advice.
Disclaimer: This article provides general information only and is not legal advice. Family law matters are complex and individual circumstances vary. Consult with a qualified family law solicitor for advice specific to your situation.