Property settlement in family law: Dispelling the myths
We often meet with people who come to us with a preconceived idea of what they will get, or should get, in their property settlement subsequent to separation. These preconceived ideas seem to stem from a conversation they may have had with a friend or colleague, or from watching American movies and TV shows.
As a result, a myth which is proving difficult to dispel is that each party is automatically entitled to half (or some other percentage) of the assets subsequent to separation. When the Court looks to deciding how to split the assets of parties who have decided to part ways, there is no such thing as a cut and dry case. Every matter is unique. The Court will weigh up several factors before deciding on an outcome and this will involve undertaking a four-step process:
1. Firstly, the Court must work out the net assets of both parties. Not only will this include anything acquired by either party during the marriage (or de facto relationship), it can also include those assets acquired prior to the relationship, as well as after separation. Whilst this may be a simpler task in some matters, determining the net asset pool can prove complicated if there are various properties, loans, trusts and businesses involved.
2. Secondly, the Court will have to assess the contributions from both parties. Contributions can be both financial and non-financial. For example, a parent who looks after the two children of the relationship is an example of a non-financial contribution to the net asset pool, despite not being paid for their work. Another aspect to be considered is what is known as ‘initial contributions’. For example, the Court may decide to adjust the settlement in one party’s favour if they already owned a property prior to the relationship or paid for the entirety of the deposit for the matrimonial home.
3. Thirdly, the Court will have to assess the future needs of both parties and will take in various factors, some of which include: income earning capacity; health; age; assets; financial benefit from any new relationship; and the parenting responsibilities of each party moving into the future.
4. Lastly, the Court must stand back and consider the real-world effect of the proposed settlement. That is, the Court must be satisfied that the proposed division of assets will be ‘just and equitable’. This essentially involves the Court reviewing steps 1 – 3 and only proceeding to make the proposed orders once it is satisfied that it is just and equitable under the circumstances of the case.
The division of assets subsequent to separation is a complex area of the law. If you are considering separating (or have already separated) from your partner, you should seek sound legal advice as soon as possible as there are strict time limits to act. Get into contact with the team at Pagin + Mak Lawyers for a free consultation. We will be more than happy to discuss any questions you may have and explain the process in greater detail.
Disclaimer:
The information above is intended as general information only and should not be relied on. You should discuss your individual situation with a lawyer.