When parties to a marriage or de facto relationship separate, they need to reach a financial settlement which is an arrangement made between them to divide their assets including superannuation, liabilities and financial resources. Once a property settlement is reached, the parties can document the settlement agreement with or without the Court’s assistance.
‘Property’ includes almost anything of value, including:
- Property owned by one or both parties
- Business interests
- Trust interests
- Antiques and art
- Inheritance received
- Cash in bank
- Family pets and animals
Property acquired by a party to a relationship before the relationship commenced and post separation can be included in a property settlement. Property settlement is not limited to property acquired by the parties during the relationship. Liabilities will also be divided between parties, whether those liabilities are held in both names or in one name, such as:
- Credit cards
- Tax liabilities
- Study related debts
- Stamp duty obligations
- Capital gains tax
What am I entitled to in a property settlement?
There is no rule about the percentage division of property given to parties following separation and it is a popular myth that everything will be split equally between them.
The law requires that the division of assets in a family law property settlement is just and equitable between the parties. Determining what is just and equitable follows a step-by-step process, but first the court must be satisfied that is it just and equitable for the court to divide the assets between the parties.
Step one: What is the net value of the property pool?
Step two: What did each party contribute to the relationship financially and non-financially?
Step three: What are the future needs of each party and any children?
Step four: Is the division arrived at just and equitable for the separating parties?
Step one – What is the net value of the property pool?
The first step after separation is to gather all of the information to:
- Identify the value of each asset or interests in businesses and trusts;
- Identify any debt attached to each asset or property interest or trust; and
- Then determine the net value of the property pool (also referred to as an asset pool).
Step two – What did each party contribute to the relationship?
These contributions and factors include:
- Financial and non-financial contributions at all stages of the relationship, being at the beginning, during and after separation, including parenting and homemaking contributions;
- Gifts, inheritances and financial assistance and support provided by family members.
Step three – What are the future needs of each party and their children?
These are commonly referred to as section 75(2) factors. This is where the more discretionary aspects of the Family Law Act comes into play as we consider things such as:
- The length of the relationship.
- The age and health of each party to the relationship.
- Income and financial resources of each party to the relationship.
- Physical and mental capacity for future employment for each party.
- The carer needs of any children in the care of either party.
- The eligibility of either party for any benefits or superannuation.
- Child support payments being paid.
- Any other factors relevant to ensuring a just and equitable division of the property between the parties.
Step four – Is the division just and equitable.
Ultimately, this means is this deal that the parties have reached, fair. Is it realistic and achievable in a real dollar sense considering the value of the property pool, the contributions of the parties at the beginning of the relationship, during the relationship and post separation, and the future needs of each party as assessed in accordance with Section 75(2) of the Family Law Act.
A free, no obligation conversation will take you step-by-step through the initial steps of the process. Call our specialist family lawyers today for an initial consultation to discuss how we can help you.
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