One of the most common issues in family law is determining how property should be divided to achieve a fair and equitable outcome for both parties. A widespread misconception is that property is automatically split 50/50 between the parties, and that financial contributions take precedent in the evaluation of these property settlements. In reality, there are no binding precedents or implemented legislation which requires an even split of the parties’ property.

What is a Property Settlement?

For the purposes of this article, and to iterate uniform consensus on the statutory meaning of this legislative provision, s 4 of the Family Law Act 1975 defines property settlement proceedings as proceedings concerning property owned by one or both parties in a de facto relationship or a marriage. Under this Act, and in conjunction with common law precedents, the Court has the power to alter parties’ property interests through the application of a structured legal framework which analyses the holistic circumstances of each case.

Duty of Disclosure in Divorce Settlement

There are several steps which both parties must undertake to ensure all their assets and properties are accounted for and competently valued within the scope of their legal relationship. Typically, both parties, referred to as the applicant and the respondent, will create and exchange Balance Sheets comprised of their respective assets, liabilities, superannuation, and financial resources. Regardless of when the property was actually acquired by either party, the duty of disclosure requires that all property in the parties’ current possession be disclosed to either side.

After property has been disclosed, the Court assesses the value of each item at the time of the property settlement itself, rather than at the time the parties actually separated. This is to ensure that any property which may have appreciated or depreciated since the time of separation has been accounted for in the family law matter.

Types of Contributions in Property Divorce Settlement

The Court then takes a holistic approach when assessing the value of each parties’ contributions, ensuring they consider the ones which extend beyond the finite confines of financial contributions. Some examples of non-financial and indirect financial contributions to the relationship are as follows:

• Performing domestic and homemaker responsibilities such as household management and caring for children
• Initiating renovations on properties of the relationship to increase their market value
• Sacrificing employment and career opportunities to support the other party in the relationship
• Providing emotional support to maintain household stability

The law recognises the value of these contributions in addition to any financial contributions which may have been made throughout the relationship. Although monetary contributions are much more tangible, the law does not negate the positive impacts of non-financial and indirect contributions, and endeavours to apply equal recognition to these offerings as to those that generate monetary gain.

Assessing Future Needs – A Critical Step in Any Divorce Settlement

After the value of the parties’ portfolios and contributions have been assessed, the Court then analyses the future needs of each party, including the potential impacts the settlement would render unto any children or dependants of the relationship. As expected, determining future needs will significantly vary with the presence of children under the age of 18, the health of both parties and each of their respective income earning capacities. The Courts may depart from an equal division of settlement for a multitude of reasons, including but not limited to:

• Whether one of the parties has primary care of any children
• The presence of a substantial disparity in the parties’ financial resources and earning potential

Only after carefully considering the unique circumstances of each party does the Court decide whether a 50/50 division of assets is fair and equitable. While an equal split is sometimes appropriate, it is more commonly seen in relationships where property and assets were acquired jointly, where there are no children of the relationship, or where the relationship was relatively short in duration.

Every marriage and de facto relationship is different. The way assets were acquired, the financial and non-financial contributions made by each person, and the overall dynamics of the relationship can vary significantly. For this reason, many family law matters require a detailed and thorough assessment of each party’s contributions to determine what outcome is truly fair.

The Importance of Legal Representation

Because the property settlement process involves careful consideration of each party’s unique circumstances, it is important to obtain independent legal advice to understand your rights and potential entitlements after a marriage or de facto relationship ends. If you are seeking an experienced family lawyer who can provide individualised guidance and assistance in achieving your best outcome, reach out to Meredith Lawyers on 1300 537 306.