Following separation of a marriage or de facto relationship, parties usually need to arrange how they are going to divide assets and liabilities owned both individually and jointly between the parties. There is a common misconception that both parties are always entitled to an equal division of the property pool. This is not always the case.
In order to determine a just and equitable division of the property pool, there are a broad range of factors that the Court considers under Family Law Act 1975 (Cth).
These factors are used to analyse contributions made by or on behalf of each party towards the acquisition, maintenance, or improvement of property in addition to homemaking and parenting contributions. Consideration is given to the contributions prior to commencement of, during, and following separation of the relationship. The weight given to each of these factors is also consider in addition to the length of the relationship and the overall property pool. For example, initial contributions prior to the relationship will likely be considered with more weight for a 4-year relationship compared to a 14-year relationship. However, each separation is different, and the weight given to each factor is heavily dependent on the surrounding circumstances.
Contributions by the parties can be broken down into the following general categories:
- Initial contributions – whether either party had a greater income or owned more assets and liabilities than the other at the commencement of the relationship.
- Financial Contributions – whether either party made greater contributions than the other by way of payment towards general living expenses, bills, mortgage payments, payment of maintenance, purchasing property, and liabilities taken out such as credit cards. This also takes into account each parties employment throughout the relationship.
- Non-financial Contributions – whether either party made greater contributions than the other by way of gifts or inheritances from family, managing investments, running a business, or performing renovations to property.
- Homemaker & Parenting Contributions – whether either party contributed more than the other towards the welfare of the family and household such as proportion of care for children of the relationship, cooking meals, general house cleaning and yard maintenance.
In addition to the contributions by the parties as set out above, consideration is also given to the future needs of each party. This includes age, health, current financial situation, caring responsibilities of children and earning capacity. For example, a party who is unable to maintain employment due to ongoing health issues requiring expensive treatment presents a greater future need than someone who is healthy and working full time.
In instances where there is a vast difference in income between the parties, the party with a low or nil income may also have the ability to seek spousal maintenance. Spousal Maintenance is a sum of money that can be paid by periodic instalments or lump sum payment. In order to determine the eligibility and sum of spousal maintenance, the court considers what are reasonable financial needs based on the surrounding circumstances on a case-by-case basis. This is determined based on future need factors previously discussed alongside the lifestyle of the parties during the relationship and whether either party is making child support payments.
Due to the extensive scope of factors taken into consideration, a party’s entitlement in a property settlement cannot be determined on mathematical basis. Rather, it is determined in each matter by taking into consideration of all surrounding circumstances. Therefore, it is important to obtain legal representation upon separation to ensure that you obtain a just and equitable outcome.
