Author, Carol Pages, Pages Family Law.
How is property divided after separation?
Separation is a stressful time. The thought of having to figure out how to divide your property can be overwhelming. The below is a summary guide of how family law property divisions work.
The below is written based on what the Court decides. We provide advice to our clients based on what the Court decides. Our aim is for you get the right advice about how the Court would decide your property division – so that you can negotiate your matter, which may be with the assistance of a mediator or our office, and stay out of the Court where possible.
Preliminary step
The first step the Court considers is whether it is just and equitable to make a property settlement order by identifying all of the existing legal and equitable interests of the couple. This means – what assets and liabilities are in your name, in your former partner’s name, jointly owned or owned by one of you with someone else. An example of equitable property is a distribution from a family trust.
The Court must have a principled reason for altering the existing property interests of the separated couple. What if both parties came into their relationship with their own property, and never shared their finances? This would be relevant for the Court to consider at this step. Examples of a principled reason include joint ownership of a house which would have continued if not for the separation, as well as the birth of children.
Step 1 – identify the assets, liabilities and financial resources of the parties
Usually in family law property matters we use a ‘balance sheet’ which sets out the details of each of the assets and liabilities, such as a house, car, bank account, mortgage, car loan, credit cards.
Importantly the value of assets and liabilities are at the ‘date of trial’ where decided by a Court, or if resolved by negotiation or mediation, recently valued at that time. The values are not the values at the date of separation.
Superannuation is also considered property, and can be divided by what is commonly called a ‘superannuation split.’ This can be important in families where one partner has spent a lot of time out of the workforce caring for children, for example, which means that their superannuation balance can be a lot lower than that of their former spouse.
Step 2 – Assess the contributions of the parties
An assessment is made of the financial and non financial contributions of the parties.
Financial contributions include direct contributions such as paying the mortgage or buying a car, receipt of an inheritance or other lump sum such as a gift or loan from a family member, or indirect contributions such as paying for the utilities and groceries while the other party pays the rent or mortgage.
Non-financial contributions and contributions to the welfare of the family are also taken into consideration in the assessment of contributions. Sometimes one partner is the income earner and the other may be caring for their children and managing the home. Sometimes non financial contributions can be one party doing work towards improving a property, such as renovations, or working in a business run by the couple or the family.
Step 3 – assessing future needs
Once contributions are assessed, the next step is to consider the ‘future needs factors.’
These include matters such as income of the parties, care of a child under 18, age and health of the parties and any other factor that is relevant.
Step 4 – just and equitable
Having considered all of the steps above, the Court considers the matter overall, and whether considering all of the facts of the case, that the proposed order is just and equitable.
Most matters resolve by agreement, and not by the order of a Judge following a final property hearing. When the proposed property division is put before a Court – either by Consent where neither party will ever set foot in the Court, or during the Court process where the matter resolves prior to the Court deciding, the Court must still consider the steps outlined, and be satisfied that the outcome is just and equitable.
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The above content is provided for information purposes only and does not constitute legal advice. We recommend that you receive legal advice tailored to your own needs.
Carol Pages of Pages Family Law is an Accredited Specialist in Family Law. If you would like advice regarding your property division after separation please contact Pages Family Law at info@pagesfamilylaw.com.au or on 03 9121 8077.
