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4 Jul 2017

A partial property settlement is a distribution of property (assets or money) that is distributed or paid to one party from the asset pool of separated couples, prior to a property settlement being finalised. The word ‘partial’ refers to the fact that these advances are not full and final property settlements. However, they are interim distributions to fund expenses whilst you are in the process of negotiating in proceedings seeking final property settlement.

Partial property settlement Orders are commonly characterised as being an “advance” of funds between separated spouses, prior to final Orders being made. It can counteract inequity in the parties’ access to assets and/or financial resources during negotiations or proceedings.

Why make an application for a partial property settlement?

There are a number of reasons as to why a party to Family Law proceedings might request a partial property settlement including the fact that it typically takes 1 -2 years to have a matter heard in a defended trial therefore, one party may require the assistance of an interim property settlement.

The Court is generally reluctant to make orders for partial property settlement because it takes place prior to the evidence before the Court being “tested” and a determination is made regarding final property settlement. Despite this, the Court is entitled to make such Orders as it considers ‘just and equitable’ to do so where there are circumstances that justify it in doing so. This is the threshold that any application for partial property settlements must meet.

Under what circumstances can I apply for a partial property settlement?

There are limited circumstances under the Family Law Act 1975 (Cth) in which the Court is able to make orders for a partial property settlement. The criteria to be met for an application for partial property settlement to be made are as follows:

  1. A source of funds for payment can be identified;
  2. One party has the majority of control over the assets;
  3. The payment can be made without risking that the party in receipt of the partial property settlement is receiving more property than they will ultimately receive on a final basis;
  4. There is an adequate explanation for what the funds are required for; and
  5. It can be established that it is ‘just and equitable’ (fair) to make a partial property settlement order.

 

As an example, a partial property settlement may be required where a husband is in a position of financial strength compared his wife due to his higher earning capacity and access to funds. Upon separating, the wife may need to retain a lawyer to help her through the property settlement process, but she may have limited funds and may not have the ability to pay for her legal fees. In such circumstances, the wife may seek a partial property settlement, to pay her legal fees.

The Court will make this determination on the basis of the evidence that is before it with respect to the value of the asset pool, the initial contributions of the parties and the contributions of the parties throughout the marriage, but most importantly, if it considers it is just and equitable to do so.

How do I apply for a partial property settlement?
If you have not commenced proceedings, partial property settlement can be applied for in the interim Orders sought in your initiating documents otherwise, if proceedings are already on foot, an “Application in a Case” will need to be made.

If you would like to seek a partial property settlement order, we recommend that you speak to a Family Law specialist

This is general information only, and does not constitute specific legal advice. If you would like further information in relation to this matter or other legal matters please contact our office on Freecall 1800 609 945 or email us now.