Understanding Property Settlement
After the breakdown of a marriage or de facto relationship, the parties are usually left unsure about their financial and property entitlements.
There is a myth that there is a presumption that assets, or commonly referred to as the “property pool” should be divided equally between the parties. However, there is no automatic entitlement in property and financial matters.
Each parties’ entitlement to the property pool depends on their circumstances before, during and after separation or divorce.
There is no presumption of a percentage entitlement in relation to a property or financial settlement.
What is taken into account when determining a property/financial settlement?
In Australia, the Family Law Act set out the determining factors for how property and financial matters are to settled. There is no precise formula which to be applied as the settlements are based on all of the facts.
When considering property and financial settlement, the following are considered:
- The value of all assets and liabilities so as to establish the net assets, including assets held individually, in partnership, by companies and by trusts.
- The contributions made by each party to the acquisition, maintenance and improvement of the assets, including financial contributions, assets owned at the commencement of the relationship, windfalls such as gifts from parents, inheritances, redundancy packages, etc.
- The non-financial contributions made by each party such as domestic and parenting duties and employment.
- Indirect financial contributions such as giving up a career to allow the other party to further their own career.
- The future needs of the parties such as whether they have responsibility for the care of children, their income earning capacity, their qualifications, age, financial resources, health and superannuation.
- What is just and equitable in consideration of the contributions and circumstances of each party.
Remember that there is no presumption of a 50/50 split as a starting point and that each matter is decided upon the particular circumstances of each case.
The Family Court can make Orders that are just and equitable in relation to division of property.
Separating parties should obtain independent legal advice about their entitlements at the earliest opportunity.