Property Division and Financial Matters
When a marriage or de facto relationship breaks down, the separating parties will have to deal not only with the emotional fallout but must also at some stage consider how their property is to be divided and their financial ties separated. There is no automatic 50-50 division of the assets of the relationship. Instead, property division or property settlement as it is known is determined based on each party’s contribution towards the acquisition of the assets and the care of the family as well as the future needs of the parties.
Approach towards Property Division
Generally, the Family Court adopts a 4-step approach towards property division:-
1. Identify and value all assets and liabilities of the relationship
What are the assets of the parties? This would include:-
- Assets held in the sole or joint names of the parties.
- Assets acquired prior to the relationship being established, during the relationship and after the relationship had ended. Hence, assets acquired after separation but before property division is resolved are to be taken into account.
- All assets of the relationship in Australia and overseas are to be taken into account including:-
- the matrimonial home of the parties;
- investment property, if any;
- cars, motor-cycles, trailers, caravans and boats;
- shares held in public listed or private companies;
- money held in bank accounts or investment entities;
- assets held by a trust controlled by both or one of the parties,
- superannuation interests;
- inheritances and gifts;
- personal items such as jewellery, watches and any other asset of value.
What liabilities need to be paid out? Similarly, this would include liabilities in the sole or joint names of the parties as well as liabilities of the businesses, trust and companies controlled by both or one of the parties. For example, the mortgage on the matrimonial home and investment property, car loans, credit card debts, outstanding tax liabilities and outstanding business or personal loans.
2. Identify the financial and non-financial contributions each party made towards the acquisition and maintenance of the assets of the relationship as well as contributions as homemaker and parent
In assessing the financial contributions, the following are to be taken into account:-
- Property and cash brought by each party into the relationship at the commencement of the relationship.
- Payments made by each party during the relationship and after separation by way of wages, lump sum payments, inheritances or gifts, compensation payments, pension or the use of other financial resources towards the acquisition and maintenance of the assets.
In assessing the non-financial contributions, the following are to be taken into account
- The efforts and time spent by each party towards the care of the household including the cooking, washing and other household chores.
- The care and support of the children.
- The maintenance and renovations of the family home and any investment property carried out by the parties.
- The efforts and time spent in the family business, if any.
After assessing the financial and non-financial contributions made by each party, the entitlement of each party to the property division is determined. This is expressed as a percentage. For example, in a short relationship where one party brought the majority of the assets into the relationship, it may well be that this party is entitled to 55% or more of the property division. On the other hand, property division may be 50% each in a long relationship, where parties entered into the relationship when they were young and built up the assets during the relationship with one party working and the other caring for the home and children.
3. Identify current and future needs and resources of the parties
Consider whether the division determined after Step 2 above should be adjusted after taking into account the current and future circumstances of the parties, including:-
- Age of the parties.
- State of health and medical condition of the parties.
- Future earning capacity and financial resources of the parties.
- Whether a party has care of the children or other dependents and their needs.
- Whether a party has formed a new relationship and the financial circumstances of this new relationship.
For example, one of the parties in a long relationship may have substantially greater earning power due to his or her qualifications while the other party had been a fulltime homemaker during the relationship caring for the household and children. In this case, there may be an adjustment of say 5% to 20% in favour of the party with the lower earning capacity, depending on the circumstances of the case.
4. Consider whether the propriety division determined pursuant to Steps 2 and 3 above is “just and equitable”
“Just and equitable” means what is fair in all the circumstances of the case. The Family Court has a broad discretion in considering whether the property division determined in Steps 2 and 3 above is “just and equitable”. The Family Court considers not only the percentage of the property division but also the practical effect on the parties of the property division order made.
Importance of Seeking Legal Advice Before Proceeding with Property Division
While some property division can be reasonably straightforward, others can be extremely complex. In any event, it is important that you receive accurate and timely legal advice about your rights and also equally important the time frames imposed under family law to commence property division in the Family Court.
At Robertson Hayles Lawyers, our family law solicitors provide advice in regards to your entitlements. We provide advice on a range of options to achieve a settlement including negotiated settlements, mediation and where agreement is unable to be reached, commencement of Family Court proceedings.
Our family law solicitors will also provide you with advice about matters arising from your proposed property division including taxation and stamp duty implications and other issues which when overlooked may have serious financial consequences.
Robertson Hayles Lawyers – Experienced Family Lawyers
Our family law solicitors have acted in all types of family situations including families where the only asset is the family home to complex and substantial property settlements for disputes involving businesses, company structures, self-managed superannuation funds and business loan facilities. Our family law solicitors have experience in commercial law which provides them with the requisite knowledge to effectively manage property division involving complex company and trust structures and other commercial arrangements.
Consent Orders, Binding Financial Agreements and Court Proceedings
If parties are able to reach agreement on property division, parties can proceed to obtain Consent Orders through the Family Court. In some cases, the parties prefer to enter into a Binding Financial Agreement to record the terms of the property division rather than seek a court order. A Binding Financial Agreement is a private arrangement and is not lodged in the Family Court. Our family law solicitors will provide advice regarding the most appropriate option for you.
If an agreement is not reached, our family law solicitors will provide you with advice about the Pre-Action Procedures that are required to be taken before commencing property division proceedings in the Family Court. Our family law solicitors will prepare the required financial and court documents in order to progress the matter through the Family Court. Our family law solicitors will appear on your behalf in court hearings and also offer you access to Family Law Barristers in the event that the matter should proceed through to a trial.