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THE PROPERTY SETTLEMENT PROCESS IN AUSTRALIA

Thu, 25 Jul 2019

THE PROPERTY SETTLEMENT PROCESS IN AUSTRALIA

At Affinity Family Lawyers, we are all too aware that separation from a husband/wife or long term de facto partner can be one of the most stressful and traumatic events in a person’s life.

It can also be one of the most confusing times in a person’s life, especially if the only experience someone has had of the family law system and the process is by hearing their friends or family talk about their own experiences, which are more than likely tainted with that persons own misgivings, and opinions on the system, and which may or may not even apply to you, your matter or your particular circumstances.

We have written several articles previously in relation to separation and the process that occurs after separation (links are posted at the end of this article if you would like to read them).  It is important to remember that the vast majority of family law matters are able to be settled between the parties out of Court, and an agreement can reached either by negotiation via solicitors or the parties attending at a mediation and formalising the agreement by way of a binding financial agreement or consent orders.

However, there are of course matters which are not easily resolved, or which have complex circumstances which necessitates the need for the Court to assist in determining the matter.

If a family law matter does proceed to Court, it is important that parties are aware that there is no exact science in how the Court will determine exactly how the assets are to be split between spouses upon the breakdown of a relationship.

Generally if a matter does come before a Court, then the Court will undertake a four-stage process to arrive at a percentage split between the parties, which can be briefly summarised as follows:

1. Identify and value the property pool of the parties;

2. Consider the contributions of each party towards the relationship and assets of the relationship, including toward any children of the relationship;

3. Consider the future needs of the parties in accordance with the factors prescribed in Section 75(2) of the Family Law Act 1975, which include (but are not limited to) the age and health of the parties, the income, property & financial resources of each party and their capacity in relation to employment, the care and control arrangements of any children, and the extent to which either party has had their earning capacity affected by taking on a role of primary homemaker during the relationship.

The Court will also have regard to whether either party is in a relationship and what the financial circumstances are of the new relationship.

4. Consider whether the proposed order is just and equitable.

STEP 1: IDENTIFY AND VALUE THE PROPERTY

When identifying ‘property’, the Court will have regard to all assets and liabilities of the relationship, regardless of whose name the property is held in. Further, assets which a party may have direct control over, such as a company or a trust may also be included.

Once the property has been identified and valued (if required), the assets and liabilities are ‘pooled’ and a property pool is created to determine the net value of the total property holdings of the relationship (being all assets, including superannuation minus all of the liabilities).

If there is a dispute about the value of a particular asset, an independent valuation may need to be conducted. 

STEP 2: CONSIDER THE CONTRIBUTIONS OF EACH PARTY

After consideration of the entire property pool, the Courts are required to take into account the parties respective contributions which were made during the relationship. The Courts will consider both financial contributions and non-financial contributions.

Non-financial contributions generally include contributions as a homemaker and/or contributions to the welfare of the family made, when determining the percentage split between parties.

In determining the weight that should be given to the financial and non-financial contributions, the legislation unfortunately does not give much guidance, and each case is determined on a cases-by-case basis at the discretion of the Court, which is of course exercised judicially.

STEP 3: CONSIDER THE SECTION 75(2) FACTORS

Section 75(2) factors include all factors which may affect the future needs and earning capacity of a party, such as age, health, respective incomes and earning discrepancies, financial resources, whether one party has the care of a child thus limited their working hours and so on.

The usual effect of this step is that a party’s percentage entitlement (which is arrived at in Step Two) may be adjusted up or down, depending on the current and future needs of each party.

For example, a person who might be entitled to say, 70% of the property pool based on the assets they brought into the relationship, may find their entitlement reduced by several percent if the other party has a significantly lower earning capacity or is the primary carer of the parties children.

STEP 4: JUST AND EQUITABLE REQUIREMENT

As advised above, it is often difficult to advise how much weight is attributed to the contributions made over the course of a relationship and the 75(2) factors, however the guiding principle for the Court is that the final Order made, in the overall sense, must be just and equitable (in other words just and fair).

For further reading, please feel free to peruse the below articles:

https://www.affinitylawyers.com.au/blog-view/seperated-from-your-spouse-over-the-christmas-261

https://www.affinitylawyers.com.au/blog-view/do-we-need-to-involve-the-court-in-relation-to-248

https://www.affinitylawyers.com.au/blog-view/what-happens-in-a-property-settlement-when-my-236

https://www.affinitylawyers.com.au/blog-view/common-traps-after-separation-235

https://www.affinitylawyers.com.au/blog-view/how-do-i-get-a-divorce-232

https://www.affinitylawyers.com.au/blog-view/recently-separated-or-considering-separating-will-218

https://www.affinitylawyers.com.au/blog-view/common-misconceptions-of-family-law-201

Affinity Lawyers is well placed to guide you through this traumatic time, so contact one of our friendly family lawyers in our Gold Coast office today on 07 5563 8970 to discuss your individual circumstances, and to ensure that you are aware of your rights, obligations and where you stand moving forward.  We can also assist with answering any questions you may have in relation to the property settlement process, or in respect of any children involved.

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