Family Law Courts must consider several factors when making a property settlement orders

When parties to a marriage or de facto relationship break up, they usually need to divide their property. If they were not together long, each one might keep the property he or she brought into the relationship. In most cases, however, parties acquired property together. They will need to agree upon a property settlement or ask a Family Law Court to make one for them.

When a Family Law Court divides property that people acquired together, the law refers to the court’s action as an “alteration of property interests.” This article will explain the law that governs the court’s decision.

Why does the court divide property?

In a long relationship, even if only one partner earned the income that was used to acquire property, the other partner will probably be entitled to a share of that property when the relationship ends. Family Law Courts recognize that partners who do not work outside the home make it possible for the working partner to earn an income by freeing the working partner of the responsibility to raise children and manage the household.

What factors does a court consider?

Section 79(4) of the Family Law Act requires the court to consider several factors when it alters property interests. They include:

• Financial contributions made by each party to the marriage or relationship.
• Financial contributions made on behalf of each party to the relationship (for example, property provided by a relative).
• Contributions (other than financial contributions) made to property by each party (for example, managing an investment portfolio or repairing a roof).
• Contributions to the welfare of the family, including contributions as a homemaker or parent.
• The effect of the court’s order upon each party’s earning capacity.
• The impact of other court orders upon each party.
• Each party’s need for maintenance.
• Each party’s obligation to pay child support. 

How does the court apply those factors?

The Family Law Court’s ultimate duty is to make a property settlement that is fair and equitable. As a general rule, it does so by comparing the contributions to the marriage or de facto relationship that each party made and by dividing property in proportion to those contributions.

For example, assume the husband earned the income that was used to acquire the couple’s property. In a long marriage, the court might decide that the wife’s contribution as a parent and homemaker constituted 40 percent of the total contribution to the marriage while the husband’s earnings constituted 60 percent. If the court finds no reason to change that proportion, it would award 40 percent of the property to the wife and 60 percent to the husband.