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What is a property settlement?
In basic terms, a property settlement determines how much you and your spouse will receive after all of the assets, liabilities and superannuation are identified. The property, assets and superannuation are jointly referred to as the property pool, which is what will eventually be divided and distributed between the parties.
Common misconceptions
It is a common misconception that both parties to a property settlement will receive a 50/50 split of the property pool. It is important to understand that each matter will be viewed independently because no two matters are the same. Marriage does not automatically entitle each party to an equal division of assets.
The court will decide on a ‘fair and just’ division of the property. This decision will reflect the financial and non-financial contributions made by each person during the relationship. The court will also examine the future needs of the parties moving forward.
So, what does the court consider?
The court will likely apply section 79(4) of the Family Law Act 1975. These factors include the financial contributions made by each party at the beginning, during and after the relationship. Examples of these contributions include income, any inheritances and investments.
The court will also examine any non-financial contributions made to the improvement of property, such as renovations, landscaping or interior design commitments.
Finally, the court will look at the contributions made by each party in their capacity as homemaker, if relevant. These considerations include childcare, domestic duties and commitment to the family welfare. The court often views the financial and non-financial contributions as equal, acknowledging that raising children and caring for the home is just as important as earning an income.
Over a long marriage, the court will often view the overall contributions, whether they be financial or non-financial, as equal. This is because both parties will have made significant contributions to the relationship in different but equal ways.
In a shorter relationship, the court may take a different approach and attribute greater weight to contributions made by each party. However, as discussed, the court has ultimate discretion and each matter will be different.
The court will also look at section 75(2) of the Family Law Act 1975. This provision enables the court to consider any further factors that may be relevant in determining a property settlement.
These factors include:
- The age and state of health of each of the parties
- The parties’ ability to earn income
- Employment prospects
- Whether each party has the care or control of a child of the relationship who is under 18
- Commitments relating to care for another person or support of themselves
- Any child support that either party must provide in the future
- The need to protect a party who wishes to continue in their role as a parent
- Eligibility for a pension or government benefit
- Whether the parties have been separated or divorced
- The extent to which payment of maintenance could enable further education, thereby increasing earning capacity
- The extent to which one party has contributed to the income, earning capacity, property and financial resources of the other party
- How the length of the marriage has influenced the earning capacity of the party seeking maintenance
- The need to protect a party who wishes to continue their role as a parent
- Financial circumstances of any current cohabitation by either party
- Any other fact or circumstance which the court feels needs to be taken into account.
For further advice regarding how these factors may apply to your situation and affect your entitlement to the property pool, contact one of our highly qualified solicitors on 1300 662 535 or email us at team@jamesnoblelaw.com.au
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