Following the breakdown of a marriage or de facto relationship, it is common for separated parties to be unsure and therefore anxious about their entitlements in a property settlement and the assets they are likely to retain. This is only natural given that Family Law is a complicated and emotional area of law which is often poorly understood.
Unfortunately, this is reflected in a great quantity of inaccurate statements often regarded as fact by those in the community.
Automatic entitlement – a popular myth
Contrary to popular belief, there is no presumption that assets should be divided 50/50, 60/40 or in any other subjective proportion. The Family Court always has full discretion.
People often receive “advice” from well-meaning friends or family as a result of their own experiences or based on depictions in the media. This advice is often misleading and can be unhelpful when it creates a false expectation.
Each person’s situation is different and should be carefully assessed by a Family Lawyer qualified to give proper advice.
No two cases are decided the same and there is no presumption of any kind in relation to a financial / property settlement when it comes to percentage entitlements. It is important to realise that one person’s settlement will probably be different from yours and others you may have heard about.
How can the parties reach a legally binding property settlement?
The parties may reach a property settlement agreement without going to court, with or without the assistance of a lawyer. In order for the agreement to be legally binding on both parties, however, this verbal agreement needs to be documented by a lawyer into a written agreement. This written agreement must follow the legal requirements set out in the Family Law Act.
Alternatively, if the parties cannot reach agreement on a property settlement, the property division will need to be decided by a third party, like an arbitrator or the Family Court.
If the matter goes to court, the factors the court must take into account in deciding how the property is to be divided are set out in the Family Law Act.
A lawyer practicing in Family Law will know exactly what is taken into consideration by the Court when providing detailed and specific advice to clients. There is no universal equation applied. Property settlement is based on all the information provided, the application of the Family Law Act and the discretion of the Court in deciding the matter.
Some of the factors that the court will consider when deciding a property / financial division between the parties are:
- The current value of the assets and liabilities of both parties. The Court will require all assets and liabilities to be identified to establish a ‘net asset pool’. This includes superannuation entitlements, as well as assets held personally, in partnership or by trusts, or companies.
- The direct financial contributions made by each person to the acquisition of assets or to the preservation, improvement or maintenance of those assets. This will include assets owned at the commencement of the relationship.
- The indirect financial contributions made by each person in the relationship, such as gifts and inheritances received from family members.
- The non-financial contributions made by each person, such as caring for children, being the homemaker, maintaining or improving the assets by personal exertion (for example, individual efforts in renovations that increase the value of an asset).
- Identifying the future needs of the parties, for example, age, health, financial resources, superannuation, care of children and income earning capacity.
After factoring in all of the above, the Court will consider whether any proposed property settlement is ‘just and equitable’ in the circumstances.
No particular factor is given priority over another, meaning that someone who is the sole income earner will not necessarily be entitled to a greater financial settlement than the other person who was a stay-at-home parent to the children of the relationship.
Summary
It is important to remember that there is no presumption of equality (like a 50/50 split) as a starting point in respect of contributions and that each matter will be decided upon the particular circumstances of that case. The Court has broad powers to make orders for a just and equitable division of assets.
The information in this article is of a general nature only. It is important for anyone considering separating from their spouse, or who has already separated, to obtain independent legal advice from experienced family law solicitors about their likely property settlement entitlements.
If you would like advice, guidance or assistance about property settlement entitlements following the breakdown of a marriage or relationship, contact us here or email [email protected].