What Happens if You Don’t Do a Financial Settlement after Divorce

May 22, 2024    propertysettlementlawyersperthwa
What Happens if You Don’t Do a Financial Settlement after Divorce

Divorce case settlements are the most challenging process since they result in huge emotional and financial damage. In case a year has passed since your divorce, and you have failed to resolve your financial settlement after separation, you may lose the right to do so. Apart from this, you may not receive what you are entitled to under the Family Law Act 1975.

A financial settlement in divorce is the division of assets and also liabilities between the two parties after divorce. These finance areas include property, savings, investments, taxes, businesses, and debts. The main objective of a financial settlement is to ensure an impartial distribution of marital assets and also to provide financial clarity to both parties.

This article will help you explore the importance of financial settlements by focusing on what can be the consequences if you fail to do so after divorce.

Understanding the Legal Frameworks

As per the Family Law Act 1975, there shall be a proper financial and property settlement after separation. The law further emphasizes an equitable and impartial division of assets based on multiple factors like the tenure of marriage, the financial and non-financial contributions of both parties and their future requirements.

Understanding the Consequences of Non -Settlement of Finances after Divorce

If you have separated from your spouse and have not yet achieved a financial settlement, then there is a chance that you will encounter some serious consequences. Let’s explore some of the major ones to save you from future trouble.

1. Consistent Financial Entanglement

When you fail to sort out your financial settlements, you are bound to remain financially entangled with your spouse. This entanglement can result in complications and emotional and financial disturbance, specifically when your former spouse incurs new debts or the financial situation deteriorates significantly.

In failure to have a formal settlement, both parties shall be responsible and accountable for each other’s financial actions even after divorce.

2. Impact on Future Relationships

If you enter into a new relationship without resolving your financial agreements with your former spouse, you have a great chance to make the matters complicated. Your newly married spouse might only unite finances with legal clarity and settlement of your former financial obligations. These complications can give birth to problems in your new relationship.

3. Tax Implications

When you’re delaying settling your financial matters after divorce, you’re inviting unwanted and adverse tax consequences. Taxes like capital gains tax (CGT) and stamp duty are exempted at the time of your divorce but may no longer be applicable if your financial property settlements are delayed. This further results in high tax liabilities, which can increase your financial burden after divorce.

4. Failure in Asset Management

If your assets are not divided clearly after separation, then there can be financial strains in the future while managing and planning your finances. You can face difficulties while securing loans, refinancing your properties, or investing in building more assets. Financial institutions like banks require clarity regarding ownership of assets and liabilities, which is only possible with a proper financial settlement.

5. Out-of-Time Settlements

In case 12 months have passed since your divorce, and you have failed to resolve your financial settlements yet, you or your spouse will be required to seek leave from the court to apply for financial orders out of time. If the court restricts you or your spouse from applying the time limit, then you or your spouse have lost the right to division of property.

To avoid such serious circumstances, a legal property settlement is advisable after your divorce. However, in such serious cases, a property finance lawyer can come to your aid and assist you through the legal complexities.


In conclusion, it is important to mention that coming to a legal property settlement after separation is an entirely complex process, and failing to do so has more severe complexities. However, with the assistance of property settlement lawyers, you can overcome this serious legal issue.
These legal professionals hold expertise and long-term experience in handling property settlement issues and thus can easily guide you through the entire legal process. Above all, it is advisable to prioritize a legal, financial settlement after divorce for a secure and peaceful future.

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