Property settlements and spousal maintenance

Property settlements and spousal maintenance


How the family court decides property settlement issues

 

If you and your spouse had a brief relationship and purchased nothing together, at the time of your separation each of you might take what you brought into the relationship and what you purchased individually while you were married.

Most separating couples, however, will have acquired property together that they will need to divide. Even property that belongs to one spouse (such as a superannuation fund) is subject to inclusion in the pool of property that is divided during a divorce. Spousal maintenance will not be an issue in some divorces, but in other divorces spousal maintenance is needed to assure that a divorcing spouse maintains an adequate standard of living.

This eBook provides an introduction to the legal concepts that govern property settlements and spousal maintenance. It offers information, not legal advice. Every individual who faces a separation or divorce is unique. To learn how the law applies to your specific situation, you should consult with a family law lawyer.

Financial orders - property settlement

The Family Law Courts have the power to issue financial orders. Some financial orders address the division of property, including superannuation funds, homes, vehicles, household goods, funds held in bank accounts, stocks and other investments, and any other property that you or your spouse own, separately or jointly.

Other financial orders address spousal maintenance by requiring one spouse to contribute to the current or future support of the other, either by making periodic payments or by an award of property or a lump sum payment. Financial orders can also be entered when a de facto relationship ends. De facto relationships are discussed in another eBook in this series.

In most cases, you cannot seek a financial order from a Family Law Court until you have complied with the pre-action procedures and disclosure requirements that are discussed in Preparing for Separation and Divorce, another eBook in this series. Those procedures require you to make a good faith effort to arrive at a property settlement through negotiation or mediation before you apply for a financial order. If you are able to make an agreement, you have two choices.

You can divide your property and agree upon spousal maintenance (or agree that no spousal maintenance is required) and do nothing further, or you can put your agreement in writing and apply for a consent order. A consent order will formalize your agreement while giving you the same right to enforcement of its terms that you would have if the court had entered an order after a hearing.

If you do not resolve your differences using pre-action procedures, you can apply to the Family Law Courts for a financial order. You must usually do that within a year after your divorce becomes final. If you wait more than a year, you need to ask the court for permission to apply for a financial order. Permission is not always granted, so it is best to apply within a year.

Court proceedings

Before you apply for a financial order, you must make the full and frank disclosures that are discussed in Preparing for Separation and Divorce. After you apply for a financial order, you and your spouse must exchange financial documents at least two days before the first court event. If further disclosures are necessary, the court will set a deadline for making them. In addition, if you have not agreed upon the value of your assets, the court will probably order you to obtain and exchange opinions regarding those values. Evidence of valuation might include:

  • Property appraisals from real estate agents or other qualified experts in real estate valuation;
  • A written opinion of value from a person who is qualified to value specific property (such as a jeweler, a used car dealer, or a second hand dealer);
  • An accountant’s opinion as to the present value of your superannuation fund (if it is not an accumulation or self-managed fund).

To the extent that you can agree on a valuation or on the expert who will appraise the property, you should do so. Using a single expert will save you time and money and, in any event, the court will probably encourage you to agree to use the same expert if you can.

The specific procedure the court will follow depends upon the court in which your case is heard. You might be required to attend several court events, including those described below.

Case assessment conference and procedural hearing

In the Family Court, the first court event (in the absence of an emergency) is usually a Case Assessment Conference that is held before a Registrar. The Registrar is empowered to perform several functions, including:

  • Exploring the possibility of settlement;
  • Requiring the parties to attend a Conciliation Conference if a settlement is not reached at the Case Assessment Conference;
  • Defining the unresolved issues that need to be decided by the court;
  • Deciding what needs to be done before the case will be ready for a contested hearing;
  • Exploring concerns about family violence;
  • Deciding whether the case should be transferred to a different court;
  • Deciding whether other individuals (such as a bankruptcy trustee) need to be made parties in the case; and
  • Explaining how the case will proceed after the Case Assessment Conference ends.

In most cases, immediately after the Case Assessment Conference concludes, the Registrar will convene a Procedural Hearing. Unlike the Case Assessment Conference, the Procedural Hearing is open to the public. At the Procedural Hearing, the Registrar will enter orders that the parties have agreed upon or will enter procedural orders in anticipation of a contested hearing. You and your spouse will ordinarily be required to prepare, file, and exchange:

  • Financial Questionnaires (within 21 days after the hearing);
  • Balance Sheets (by the applicant within 28 days after the hearing, by the other spouse within 21 days after receiving the applicant’s Balance Sheet, and in revised form by the applicant within 14 days after receiving the other spouse’s Balance Sheet); and
  • Financial documents (if you have not already done so).

Conciliation conference property settlement proceedings

If your case is in the Family Court or the Family Court of a State, section 79(9) of the Family Law Act prohibits the court from making an order in property settlement proceedings unless the parties have attended a Conciliation Conference. The court may make an exception to that requirement if there is a need for urgency, if special circumstances exist, if the Registrar who presided at the Case Assessment Conference believes a Conciliation Conference would be futile or unnecessary, or if it is not practical for the parties to attend a Conciliation Conference.

Conciliation Conferences are intended to give the parties another chance to settle their differences without the need for a court hearing. The conference is generally handled by a deputy registrar or an attorney acting under the court’s direction. The conciliator will try to guide your negotiations by reminding you of the process that the court will likely use if a property settlement is made by a judge after a hearing.

There are many advantages to settling your dispute at the Conciliation Conference, if not before. You will save time and legal fees if you do not proceed with a contested hearing. More importantly, you will be in control of your fate. If you leave the property settlement to a judge who does not know you, there is no guarantee that your priorities will be reflected in the division of property that the court makes.

In any event, it is wise to agree on as much as you can, either during or before the Conciliation Conference. Try to agree upon the division of items (like used furniture and kitchenware) that probably have little value. Negotiating for items with sentimental value assures that you will keep them. That is an assurance you lose if the court decides how to divide those items. The court might even decide that items you both want should be sold and the proceeds included in the property pool, particularly if they cannot easily be valued. That result will not please either you or your spouse.

Court hearing/trial

Prior to the contested hearing, you might be required to summarize your evidence in a case information form. If you and your spouse obtained a single expert witness to value property, you will need to file an affidavit from that witness.

The hearing at which the judge will consider evidence is essentially a trial. You will need to comply with court procedures, including Family Law Rules and most Rules of Evidence. The court will consider the evidence that you and your spouse present. The court will determine what property belongs in the property pool and will decide upon a property settlement. You and your spouse both have the right to be represented by a lawyer. To be sure your interests are protected and that your evidence is not excluded because you did not follow necessary procedures, it is wise to have a lawyer on your side during the hearing.

How the court decides property settlement issues

The court is required by law to consider certain factors in making a property settlement. To assure that they comply with that requirement, courts generally follow four steps:

  • Step One: Identify assets and liabilities. The court decides what property and debts are in the property pool and determines the value of the property and the amount of the debt.
  • Step Two: Identify contributions. The court determines what contributions each party made to the acquisition or improvement of property that is in the property pool. The court does so by determining what property each party brought into the marriage and what financial and nonfinancial contributions each party made that resulted in the acquisition of property during the marriage. Contributions made by outside parties (such as parents of either spouse) must also be considered, as well the contributor’s intent to benefit only one spouse or both of them. Finally, the court will consider the value of contributions made by each spouse as a homemaker or parent. That factor is important because a wage earner often has the ability to earn income used to acquire property only because the other spouse is working without compensation to take care of the home and children.
  • Step Three: Identify other relevant factors. In addition to the factors discussed below that are relevant to spousal maintenance, the court must also consider the effect of a proposed property settlement upon a party’s earning capacity and the amount of child support that one spouse will likely pay to the other.
  • Step Four: Make a just and equitable order. Once the court has a full understanding of the contributions each party made to the marriage and other factors that affect the fairness of a property settlement, the court decides what percentage of the property pool should be awarded to each party. The ultimate goal is to be fair, but the fairness determination is driven by the findings made during the first three steps.

How the court decides spousal maintenance

The duty of one spouse to support the other continues after a marriage terminates, at least to the extent that support is necessary. The duty falls equally upon both spouses but a spousal maintenance obligation is not imposed automatically. Section 72 of the Family Law Act requires a spouse to support the other spouse after divorce if:

  • the spouse being asked to provide support has the reasonable ability to do so; and
  • the spouse who is asking for support is unable to support himself or herself because of child-care responsibilities, age, infirmity, disability, or some other legitimate reason.

Factors that are relevant to spousal maintenance include:

  • the length of the marriage;
  • each spouse’s age, health, and earning ability;
  • child care responsibilities;
  • other commitments and responsibilities;
  • pension eligibility;
  • standard of living;
  • the effect of cohabitation with another person on the party’s financial circumstances; and
  • other facts that are relevant to a fair determination.

An award of spousal maintenance is most common when one spouse has sacrificed his or her career or suffered a loss of earning capacity in order to act as a homemaker or parent, allowing the other spouse the opportunity for career advancement and improved earnings. The court might make an award of spousal maintenance not just to provide support but to permit the spouse who made sacrifices to obtain additional education or vocational training so that the spouse can become self-supporting.

An award of maintenance can be accomplished by:

  • awarding the spouse who needs maintenance an additional share of the property pool (after the share to which that party is entitled has been determined);
  • awarding a fixed amount of money to be paid as a lump sum or in installments; or
  • requiring periodic payments of money for a limited or indefinite term.

Spousal maintenance awards can be registered with and collected by the Child Support Agency. Spousal maintenance orders can be amended or terminated if circumstances change (if, for instance, a former spouse who receives maintenance remarries or begins to earn a substantially higher income, or if a spouse paying maintenance suffers a disabling injury or loses a job).

Warning and Disclaimer
Property Settlements and Spousal Maintenance by Alan Weiss is a self-help eBook written from the perspective of the author.

The author does not claim to be a substitute for a lawyer. Nor does he claim knowledge of any individual’s situation. This EBook does not give legal advice its aim is to give practical advice. Visit Aussie Divorce to find the right divorce lawyer.

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