Separating from a relationship can be a stressful time in your life and there are many things to consider and work out between the parties to the relationship. At The Family Lawyer, we are here to help you understand the key terms and provide you with advice to navigate this difficult time.
Firstly, the terms property settlement and divorce are often used interchangeably, but they do have different meanings. If you are getting a divorce, this is the end of the marriage between two parties. Divorce does not involve the dividing assets of the relationship. Whereas property settlement is where the couple divides their assets upon separation.
What are the assets and liabilities of the relationship?
Assets or liabilities are owned jointly or individually by the parties, this may include: the family home; cash; bank accounts; jewellery; vehicles; superannuation; businesses; debts (including credit cards, loans, mortgages, and personal debts); and inheritances. These assets and liabilities are often referred to as property, this includes what is accumulated during the relationship and in some circumstances, what was accumulated prior and after the relationship. Some properties may be excluded such as gifts or insurance payments, but this is highly dependent on the circumstances. All of these assets and liabilities will form what is called the property pool. It is important you speak to The Family Lawyer for separation and family law advice today to assess the property pool.
How are assets divided?
Unfortunately, there is no simple calculator to say how the property pool should be divided. It is also very dependent on the circumstances of the relationship, for example whether it was a long or short relationship, what was brought into the relationship and any other needs of the parties.
Under the Family Law Act, the property is to be divided in a just and equitable manner, which is calculated in a four-step process.
Step 1: Value of the assets and liabilities
The first consideration is identifying all the assets and liabilities of the relationship such as the value of the real estate, cars, shares, and any liabilities such as the mortgage or credit card. We look at their current value and put together the property pool.
If a value of an item cannot be agreed, it can be valued by an independent valuer. This figure will then be used in the property pool.
Step 2: Assessing the financial and non-financial contributions
After we have established the property pool, the Court then looks at the financial and non-financial contributions of both parties. Non-financial can include a physical renovation of a home or caregiver and homemaker to the family unit. Financial contributions are typically employment income or any other indirect income.
Inheritances, gifts, or redundancies can also be considered property as part of the pool or a financial resource of one or both of the parties.
Step 3: Future needs and adjustments
The court then considers the parties’ potential future needs and whether either party should receive an adjustment in their favour. Future needs are about considering the earning capacity of each party, any health issues, care of children, and the financial resources the parties have available to them. Every case is different and the adjustment which may be made is dependent on the circumstances.
Step 4: Is the outcome just and equitable
Finally, when considering the division of property of the relationship, the court assesses whether it was ultimately fair and equitable considering all the circumstances. Every case is different and will be decided based on the merits and circumstances of your case.
It is important to seek advice about the circumstances of your case and the likely outcome. At the Family Lawyer, we are here to help you understand what a property settlement may be and how we can resolve your matter as efficiently as possible. Contact us today for a FREE case assessment and to greater understand your property settlement and proposed property division.