Property division is an important aspect of family law. After the best interests of any children to the former marriage or de facto relationship are considered, it will be necessary for parties to turn their attention to the division of assets and liabilities. Reaching an agreement regarding property division can avoid the expense and stress often associated with court proceedings.
Pre-action procedures , including conciliation, provide an important opportunity for both parties to make a genuine effort to resolve their property dispute. Only in exceptional cases (such as cases involving family violence) may the court may accept that it is not possible or appropriate for the pre-action procedures to be carried out. Agreements concerning the division of property may be formalised through consent orders or a financial agreement.
There are important differences which must be considered before choosing to utilise one form of agreement over the other. For an enforceable financial agreement to be entered into independent legal advice must be obtained by all parties to the agreement and strict compliance with the statutory requirements for financial agreements must usually be had.
When property division through agreement is not possible, an application for property orders must be submitted to either the Family Court of Australia or the Federal Circuit Court within 12 months of a divorce becoming final. Throughout the four step process of property settlement, there exists a duty of disclosure which continues until the matter is finalised by the court. The duty of disclosure requires parties to a family law matter to make available to the other party all relevant information in a case. In property settlement matters, there exist additional requirements of disclosure in relation to: sources of earnings, income, property, financial interests, all forms of property disposal (within one year of separation) and other financial resources. Penalties for failure to disclosure relevant information may be potentially very serious ranging from refusal by the court to use a particular document as evidence to a fine or imprisonment for contempt of court.
The first step of the four stage process of property division involves determining the net asset pool between the parties to the former marriage or de facto relationship . The net asset pool includes all assets (such as property, cars, furniture etc) or liabilities (mortgages, loans, credit cards) acquired before or during the course of the relationship, as well as after separation. The court will also have regard to other financial resources in which either party has an interest. If the value of a certain item cannot be agreed upon by the parties then an independent expert will be brought in to make a determination.
The second step involves consideration of contributions made to the relationship. Contributions may be financial (wages, the amount of money brought into the relationship, etc.) or non-financial. Non-financial contributions range from value adding contributions that a party has made to property or other assets, to parenting or homemaker contributions.
The third step is concerned with the future needs of both parties. Whilst there is no set formula capable of predicting the exact outcome of a court’s property division, the Family Law Act does list the factors to which the court may have regard in reaching its decision. These include, the responsibilities of a party to care for another person, the age and health of a party, any need to protect a party, what is required to ensure a reasonable standard of living and the capacity of a party to obtain future employment.