Author: Carol Pages, Pages Family Law.

In the latest article in our series on Family law property division we give an overview of the process of dividing property in family law matters.  

Just and equitable?

The law starts by considering whether it is ‘just and equitable’ to make an order about the property of the parties.  There must be a ‘principled reason’ to do this before the law will alter the ownership of property.  Examples of principled reasons include joint ownership of property, such as a house by the couple which would have continued if they didn’t separate, and can also include children born of the relationship.

There can be relationships where it may not be appropriate to make an order about the property of the parties.  What if each of the couple came into the relationship with property, and kept their property separate during the relationship? What if the relationship was very short and the assets were mainly owned by one person in the couple?  Different considerations apply where there is a financial agreement or ‘pre-nup’ in place as these are usually intended to exclude the operation of the family law property division sections entirely, or in respect of specified assets.

Family law property is a ‘discretionary jurisdiction’ which means each case is decided on its own facts.  Unfortunately there is no magic formula, however the principles from the law assist parties (and where relevant their lawyers) in negotiating a division of their assets that is ‘just and equitable.’

Lawyers commonly refer to the ‘four step process’ for dividing property.  An overview of these steps is outlined below.

Step one – Identify and value all of the assets, liabilities and financial resources

The first step is to list all of the assets you own, all of the assets your partner owns and all of the assets that you own with another.  This starts the process of preparing what we often refer to as a ‘balance sheet’.

In the first article in our series about family law property division we gave a summary of how the most common assets such as a house and car are commonly valued. This article is available here.

Superannuation is also included as an asset in the balance sheet, and our earlier article providing information about superannuation and family law can be found here.

Liabilities are also included in the balance sheet, and include mortgages, personal loans, credit card debts.  Other liabilities that can be included and are sometimes overlooked are HECS debts and taxation liabilities.  Taxation includes capital gains tax, payable when an asset such as an investment property or shares are sold.

Assets also include lump sums such as inheritances received during the marriage, and after separation but before resolution, trust assets, share options and overseas property.

The relevant date for the values of assets and liabilities on the balance sheet is the date of property division – whether this is by negotiation, mediation or a final hearing in the Court, and not the date of separation. 

Step two – Identify and evaluate the contributions of the parties

All contributions over the course of the relationship are relevant.  From the assets each person had at the date they began living together, to what occurred throughout the relationship, and even post separation.

The contributions assessment incorporates financial contributions, non-financial contributions, and contributions as parent and homemaker.

The evaluation of contributions results in a percentage division.

Step three – Assessing the future needs of the parties

This step is sometimes referred to as the future needs adjustment and while the contributions assessment is focussed on the past and what has happened in the relationship, the adjustment step has a focus on the future.

The Family Law Act sets out a list of factors to be taken into consideration.  These include the age and health of each of the parties, their ability to work, ongoing care of children, income difference, or any other fact which is necessary to consider in making a final order.

It may be that one party is home caring for children and is unable to work, so an adjustment is made to the percentage division, to give a bigger share to that party.  Alternatively an adjustment could be made where one party has a health issue that stops them from earning an income to support themselves.  

The future needs adjustment is a percentage adjustment added to the contributions assessment, which results in a new percentage division.

Step four – Just and equitable?

The last step brings the question back to just and equitable.  Here, it means to consider the percentage division in the matter overall and whether in the circumstances of the case in their entirety, it is a just and equitable division.

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The content of this article is provided for information purposes only and does not constitute legal advice.  We recommend that you seek legal advice relevant to your own circumstances and we would be happy to assist you.

Carol Pages is the Principal of Pages Family Law and an Accredited Specialist in Family Law and a Nationally Accredited Mediator. If you would like advice about your own separation, please contact Pages Family Law at info@pagesfamilylaw.com.au or on 03 9121 8077.