Separation vs Divorce vs Property Settlement: What’s the difference?

When a relationship ends, there’s often a lot of confusion around what happens next, especially when it comes to legal terms like separation, divorce, and property settlement. People often use these terms interchangeably, but they are in fact very different things, each with its own legal meaning, process, and implications under Australian family law.

Whether you’re just starting the process or simply trying to understand your rights, it’s important to know what each term involves and how they interact. In this guide, we break down the key differences between separation, divorce, and property settlement to help you make informed decisions and plan your next steps.

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Key Takeaways

• Separation marks the end of a marriage or de facto relationship and must be intentional, communicated, and acted upon.
• The date of separation is legally important for both divorce and property settlement timelines.
• Divorce is the legal end of a marriage and requires 12 months of separation.
• Property settlement involves dividing assets and liabilities and can happen, for married couples, before, during, or after divorce.
• Property settlement proceedings must be conducted within:
  • 2 years from separation for de facto couples
  • 12 months after divorce for married couples 

Separation vs Divorce vs Property Settlement: A Quick Comparison

Term	What It Means	Legal Process Required?	Key Timeframe
Separation	The breakdown or end of a marriage or de facto relationship, marked by intention, communication, and action	No, but must meet specific criteria under the Family Law Act	Start of legal timelines for divorce and property settlement
Divorce	The legal termination of a marriage	Yes, must apply to the Court	Can apply after 12 months of separation
Property Settlement	The process of altering the property interests of the parties (dividing assets, liabilities, and super)	Yes, formalised by a Consent Order or a Binding Financial Agreement	Within 2 years of separation (de facto) or 12 months of divorce (married)

What is separation?

Separation refers to the breakdown or end of the elements which make up a relationship, including marriages and de facto relationships.

Legal separation in Australia does not require court approval, but under the Family Law Act only occurs when three key elements are present:

1. An intention to separate.  The formation of this intention might be by one party, or it might be mutual.
2. Communication of that intention to the other party. This means saying, or acting in a way, which makes it clear that the relationship has been ended.  This can be spoken or unspoken (and implied from actions taken); and
3. Action upon that intention. There must be a change in the behaviour of the parties, with evidence that the parties are no longer part of a unified relationship. Such evidence may include if the parties:

• Stopped living under the same roof; 
• Stopped undertaking household duties for the benefit of the other; 
• Stopped maintaining a sexual relationship;
• Stopped attending social functions together; 
• Stopped operating a joint finances; 
• Informed institutions (eg Centrelink, ATO) of their changed relationship status. 

Particularising the date of separation is important when it comes to applying for divorce or property settlement orders. We’ll explore legal timeframes and eligibility in more detail later in the post.

What is a divorce? 

Divorce means the legal termination of a marriage, by means other than death of a party to the marriage. 

A precondition to applying for divorce is that the marriage has broken down irretrievably. This means that there is no prospect of reconciling. Parties must also have lived separately and apart for a continuous period of at least 12 months immediately preceding the date of applying for divorce.  

What is a property settlement?

Property settlement refers to the process of altering the property interests of the parties to a de facto or marriage relationship – in other words, who is keeping what items of property. 

Parties can apply to the court for property settlement orders at any time from the date of separation up until:

• In the case of a de facto relationship, 24 months from the date of separation; or 
• In the case of a marriage, 12 months from the date that the divorce order takes effect. 

In practice, most couples will take steps to finalise their property settlement shortly after they separate, and well prior to divorce. 

If property settlement is not finalised within either 24 months from the date on which a de facto couple separate or 12 months from the date that a divorce order takes effect, then an application cannot be filed in court for property settlement orders without first obtaining the leave of the court (special permission) to proceed ‘out of time’. 

This is not automatically granted, and you’ll need to demonstrate a compelling reason for the delay, such as hardship or significant disadvantage.

To avoid unnecessary complications or missed entitlements due to expiring deadlines, it’s strongly recommended to address property division as early as possible after separation, with the guidance of a family lawyer.

Frequently Asked Questions: Separation vs Divorce vs Property Settlement

Is a property settlement the same as a divorce?

No, they are two separate legal processes. Divorce is the administrative dissolution of, and therefore the formal legal end to, a marriage. It’s a court process that legally terminates a marriage, so that parties are free to remarry if they wish to do so.  It does not adjust the property interests of the parties to the marriage. Property settlement, on the other hand, is the process of dividing assets and liabilities of the relationship between the parties to that relationship (whether a marriage or de facto relationship), after their separation. It can occur before or after divorce and applies to both married and de facto couples.

How is property divided after separation?

The Court typically follows a four-step process to decide a just and equitable property settlement:

1. Identify the property pool

This includes all assets, liabilities, and superannuation, whether owned jointly or individually.

2. Determine contributions

Both financial (like income and property) and non-financial (like caring for children, homemaking, or labour in a family business) contributions are considered. Specific consideration is given to the impact of any family violence on the ability to make contributions of that nature.

3. Examine current and future circumstances of each party for adjustments

Factors like age, health, earning capacity, and ongoing childcare responsibility (as well as the need to provide appropriate housing for a child) can affect the outcome.

4. Decide what’s just and equitable

Final adjustments are made if necessary to achieve justice and equity in the individual case (e.g., the costs, tax, and revenue consequences of selling or transferring items of property between spouses).

What comes first, divorce or property settlement?

Legally, there’s no required order—you can finalise your property settlement before, during, or after divorce.  Similarly, you can apply to be divorced before your property settlement is completed. 

However, many couples choose to sort out property settlement shortly after separation to avoid delays and reduce financial uncertainty. Just be mindful of the time limits for filing with the court if an agreement isn’t reached privately.  This is especially the case if you are granted a divorce first, as the making of a Divorce Order sets the statutory time limit for the making of applications for property settlement orders in respect of marriages (12 months from the date of the Order) ticking. 

Can I divorce without property settlement?

Yes, you can apply for and be granted a divorce without finalising your property settlement.

However, once your divorce is finalised, you have 12 months to initiate court proceedings for property settlement or spousal maintenance. After this period, you must seek the court’s permission (known as ‘leave’) to apply out of time, and this is only granted in limited circumstances. It’s generally advisable to resolve property matters as soon as practicable following separation to avoid legal complications.

Remember that, for de facto couples, they have a different time limit (as there is no application for divorce involved in de facto relationships) – applications for property settlement must be made within 24 months after the date of separation. 

Final thoughts

Separation, divorce, and property settlement are closely linked, but they achieve very different legal outcomes. Understanding how and when each process applies can help you decide on the steps and process you will undertake, protect your rights, make informed decisions, and avoid unnecessary delays or complications.

If you’re navigating the end of a relationship and need guidance on where to start or how to move forward, our team at BGM Family Lawyers is here to help. We offer clear, compassionate advice tailored to your situation, so you can feel confident every step of the way.

Contact us today to arrange a confidential consultation.

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