The Hidden Costs of Delaying a Property Settlement

The Hidden Costs of Delaying a Property Settlement

When couples separate, there can be a shared belief that “we can sort out the property later”.

If property settlement is left to ‘later’ or ‘down the track’, trouble may lie ahead.

Delay in family law is rarely neutral, if may favour and/or disadvantage one of the parties. In my years of experience as a family lawyer, I would go so far as to say leaving this to later is a mistake and more expensive.  

If a property settlement is delayed and not addressed soon after separation, the issues that arise include:

The asset pool is not frozen.

When the Court considers how property should be divided, it doesn’t ‘go back to the date of separation’. It will look at the value of property pool at the time of settlement. Property values can change in a year. We have certainly seen that happen over the last few years. And – if for example, after separation but before property settlement, one of the parties builds a business; pays down a mortgage; invests wisely; or receives an inheritance, those post separation gains may still form part of the divisible property pool.

The party who worked, risked, or invested after separation can find themselves sharing growth they created alone without their former spouse.

New relationships can complicate things.

People move on with their lives. Often one of the parties re-partners, and a new defacto/spouse moves in, possibly with children from their former relationship. If there is no finalised property settlement, financial arrangements of that party will have changed; contributions can become harder to assess; and new partners become indirectly exposed.

If a new home is purchased in joint names before resolving the old property pool, you may have just layered complexity onto complexity.

Superannuation grows in value.

Superannuation grows. Sometimes significantly. The balance at the time of property division may be far greater than it was at the time the parties separated. Delay can result in a materially different outcome.

Time limitation periods expire.

For married couples, there is a 12-month limitation period after divorce to commence property proceedings. For de facto couples, it is generally 2 years from separation.

If that window is missed, you will need the Court’s leave to apply for orders for property division. Leave is not automatic.

You will need to argue successfully:

1. why you should be allowed to apply out of time; and
2. the actual property case.

The delay has doubled the litigation risk and added to your legal costs.

Informal agreements not being enforceable.

Many separated couples do what is called a 'kitchen table deal'. Money changes hands; one party keeps the house; the other keeps their super. Everyone feels relieved they didn’t need a lawyer and all is sorted - until five years later.

Unless your ‘kitchen table deal’ has been formalised by consent orders or a compliant financial agreement, that deal is not binding. Your former spouse can re-open the property division.

Evidence fades/narratives can change over time.

As time passes financial records disappear, memories shift and become less reliable, contributions become harder to prove, and asset tracing can become a forensic exercise.

The longer a matter sits unresolved, the more expensive it becomes to reconstruct. Delay can cause evidentiary issues.

The emotional and commercial costs.

An unresolved property settlement is unfinished business. It can affect borrowing capacity and limits financial planning for the future.

People cannot properly move forward while they remain financially entangled with their ex.

The best, most appropriate and financially safest time to finalise a property settlement is soon after separation. This is when the facts are fresh, the property pool is clear, and (usually) life has not added new layers of complexity.

In family law, delay is usually expensive.

Everyone’s situation is unique. I always recommend that people see an experienced family lawyer to discuss your situation and obtain customised advice about how this process specifically applies to you.

OSheaDyer Townsville has experienced family lawyers who practice exclusively in Family Law.

We offer first appointments with experienced family lawyers for $330. Please call us to make an appointment.