Property Settlement Divorce
A divorce does not cover the division of a married couple's property. This must be applied for separately.
After the breakdown of a marriage or relationship it is common then to resolve “who gets what”– the financial property settlement. The law regulating property settlements is contained in the Family Law Act 1975 (Cth) and all references are to this Act unless otherwise stated.
Under the law, courts are required to find a "just and equitable" outcome when couples end their relationship and their property needs to be divided between them. The term "just and equitable" is a legal expression for what most people would call "fair". So, what courts are required to do is come up with a "fair" result.
The law tells judges (or magistrates) what things they need to consider when they are trying to work out what is fair. In simple terms, the Court has to go through a 4 step process which may be summarised briefly as follows:
Step 1: Ascertaining The Net Asset Pool
The general rule is that all assets must be taken into account, whether they are acquired before or during the marriage or after the separation.
The definition of "property" is very wide. It includes almost everything of value. "property" includes assets of either or both the parties, such as real estate, shares, cars, jewellery, savings, furniture and effects. Superannuation is treated differently and, depending on the type and value of fund, it may be divided (split) at the time that a property order is made.
The Court must also consider the financial resources of the parties. These can be funds or assets over which a party has influence or control or (in certain circumstances) prospective entitlements.
In ascertaining the net assets of the parties, valuation issues frequently arise. Taxation (including capital gains tax), stamp duties and other issues also arise. It is important for parties to have appropriate legal advice to ensure that all those issues are taken into account where appropriate.
Step 2: Contributions to the Net Asset Pool
The next step is to assess each party's contribution to the marriage, both financial and non-financial, and also assess the contribution made as homemaker or parent. Initial contributions (such as what you bring into a marriage) can be relevant as are gifts and inheritances and other "out of the ordinary" moneys received during the marriage.
Step 3: Future Needs
The next step is to assess the future needs of both parties, taking into account a range of things, including:
- Age
- Health
- income earning capacity
- the property of each party
- whether the party has the care or support of children
- the financial circumstances of any new relationship.
Where appropriate, an adjustment to the "contributions based" result can be made as a result of the consideration of those factors.
Step 4: Practical Effect
The final step is to consider the practical effect of any proposed settlement, to achieve a result which is just and equitable in all the circumstances.
For example, the court now has the power to split superannuation entitlements between separating spouses. The fourth step of the process will sometimes include a consideration of the appropriate blend of any settlement between immediately available assets, and deferred but important benefits such as superannuation.
There are no mathematical formulas for working out what the result will be and, because of this, it is impossible for anyone to predict with absolute accuracy what the outcome of such proceedings will be. When lawyers give advice about what a person's entitlements will be, they are basing their advice on their knowledge of decisions in previous cases from reading reported cases (cases in which the decisions have been published) and from their own experience in cases in which they have been involved. However, even with such knowledge, all that can really be given is an estimate, which is a range of possible outcomes.
Superannuation Divorce law
As set out in part VIIIB of the Family Law Act, superannuation is dealt with separately to property orders.
There are two elements to splitting superannuation: These are:
- How to value superannuation interests (accumulated and potential).
- How to split payments
Property Valuations
Where you are in a position to agree as to the value of any assets and liabilities, you ought to do so, even though this implies exchanging market place appraisals or applying on line valuation solutions to assist you in carrying out so.
If you are unable to reach an agreement as to the value of any asset or assets, the Court may appoint a valuer to do so and you may be required to share the costs of obtaining that valuation report. Often such valuation reports fall outside of the range that is considered to be reasonable by the parties. This is particularly the case with household furniture which is valued at its second-hand value, such as that may be obtained in a garage sale or on eBay. All assets are valued at their second-hand value obtainable in the market, not their current replacement costs
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