Family Law Property Settlements: What Factors Need to be Considered if an Agreement Cannot be Reached?

By 29 May 2018Family Law

When a couple separates, the separating parties usually consider what they are likely to receive financially after separation.

This is often an emotional process and the separating parties may have differing expectations of what comprises the property pool (combined assets and liabilities) and how the marital property should be split, including any adjustments that are deemed to be just and equitable.

What follows is a general overview of what factors need to be taken into consideration in determining division of matrimonial property, particularly when a dispute cannot be settled.

Informal and Formal Agreements

Property settlements for separating couples in Australia may be achieved by informal or formal agreement or by Order of the Court.

Informal agreement between the parties is quite common. A written agreement however may not be enforceable legally unless the parties take the additional step of submitting it to a court and applying for it to be returned to them in the form of Consent Orders.

If an agreement in respect to property settlement is reached the parties may make the agreement legally binding. This may be done either by:

  • Consent Orders or
  • A financial agreement

If there is no agreement after conciliation and the matter remains in dispute the Court has the power to make an Order setting out the terms of property division.

Property Settlement Orders

For legally married couples the Family Law Act 1975 (FLA) sets a time restriction of 12 months after a divorce to apply to the Family Court or Federal Circuit Court for property settlement Orders.

In the case of de facto relationships the time limitation to commence property settlement proceedings is two years from the end of the relationship.

Separating de facto couples (including same-sex couples) have since 2008, access to almost identical provisions about property distribution and financial matters as married couples.

Approach of the Court

If no agreement can be reached and it is left up to the Court, property settlement will be determined utilizing following adopted approach:

  1. The existing legal and equitable interests that each party has in property will be considered and the Court will decide, whether it is “just and equitable” to make an Order to adjusting those interests (Stanford v Stanford [2012] HCA 52)
  2. The Court will consider the Identification and valuation of the pool of assets, liabilities and the financial resources of both parties. The assets do include superannuation entitlements, the parties’ liabilities or debts, income and other financial responsibilities. In particular a responsibility to provide future maintenance for children or to the other person will be considered. The court makes a decision about what should be included in the final pool for distribution between the parties, the value of each item and the total value of all the items together in the “pool”. The Court requires strict frank disclosure from each party in the form of sworn Financial statements.
Contributions of the Parties

Assessment of the contributions of each party according to section 79(4) of the FLA. Each party’s contribution to the acquisition, conservation or improvement to the marital asset pool is identified. Both financial and non-financial contributions as parent and homemaker are considered. A “contributions based” division of assets in terms of percentage is achieved.

Initial contributions to the marriage will be considered, however where there is a longer-term relationships, the court more often decides that the parties’ contributions have been roughly equal.

Future Needs Factors

Various “economic factors” under section 75(2) of the FLA (Matters to be taken into consideration in relation to spousal maintenance) will be considered. This is often referred to as “future needs.”

The percentage adjustment is usually in the region of 0-20%. A person who is the primary carer for young children, or the person with relatively considerable lower income is likely to obtain a larger portion.

In assessing future needs and resources, the court will consider the parties’ age, state of health, income, property and financial resources the earning capacity of the parties, and other commitments of each of the parties in particular whether the party has the responsibility for the care or support of children or another person that the party has a duty to maintain.

The Court may then adjust the percentage entitlements of both parties (made in the previous step) upwards or downwards depending on the weight given to each of the Section 75(2) factors.

Future need factors can cover a wide range of factors for which both of the parties may be facing in unequal proportions. For example if children have ongoing health issues that will need to be paid for, where there is likely to be a disparity in income in the future or where there is a significant age difference.

Adjustments may be made by the Court

After considering the future needs of the parties, an adjustment may be made to the contribution percentage to account for those needs. That adjusted percentage is then applied to the net asset pool to determine the split or division as a dollar figure from the net asset pool.

Further there are many other factors that will be relevant in property proceedings, such as domestic violence, gifts, inheritances and wastage of matrimonial assets through activities such as gambling or alcohol or drug abuse.

Importantly, the Court will take overall consideration as to whether the Orders are “just and equitable”.

Our Services

Family Law Solicitors Sydney at Pavuk Legal can assist you with legal advice in relation to your Family Law matters. In particular we can assist you with division of your property by calculating:

  1. Your assets (what you own) prior to the commencement of the relationship, during the relationship and after separation including:
    • Real estate properties
    • Share portfolios
    • Superannuation
    • Vehicles
    • Home contents
    • Investments
    • Prospective entitlements
    • Trusts
    • Business interests
    • Interests in a company
  2. Your liabilities (your debts)
    • Mortgages
    • Debts to family members and child support payments for a previous marriage
    • Other Debts
  3. Division of property on a percentage basis calculated on the merit of your case
    • Working out what you have and what you owe and what your assets are worth;
    • Assessment of the direct financial contributions of each party;
    • Assessment of the indirect financial contributions of each party such as gifts and inheritances;
    • Assessment of the non-financial contributions of each party such as caring for children and homemaking; and
    • Future entitlements.

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