A property settlement is the division of assets between parties to a relationship.
Both the Family Court and the Federal Magistrates Court of Australia deal with property settlement matters. Both Courts apply the Family Law Act when determining a property settlement between married couples. From 1 March 2009 the Family Court and Federal Magistrates Court will also deal with property settlement matters for defacto spouses. The principles for Defacto Relationships are largely similar to those for married couples.
To determine a Settlement the Court takes a Four Step Approach-
STEP ONE- WHAT DO YOU HAVE?
The Court must first determine what assets, liabilities and financial resources are to be considered in determining the property division.
In essence a list of everything that you and your partner own is created. It does not matter if your home is registered in your name, your partner’s name of even a friend’s name- if you own it (or part of it) it will go on the list. This is also the case for debts and other liabilities.
The Court will also take the value of each of the assets as at the date that you appear for a trial- not the date that you separated. This is very important to remember.
You should prepare your own list of assets and liabilities to provide to your solicitor. Remember to include ALL items of property, even superannuation.
STEP TWO- HOW DID YOU GET IT?
Secondly, the Court looks at the different ‘contributions’ you each made during your marriage. There are many different types of contributions such as-
- Financial contributions such as income or assets that you or your partner brought into the marriage
- Non-financial contributions such as unpaid work in a family business or an owner builder undertaking renovations to real estate
- Contributions to the welfare of the family such as the day to day running of the household and care of children.
Contributions are a little like the ingredients of a cake- there are lots of them that are combined in different amounts to create the marriage. Each recipe is slightly different but still produces a cake. Similarly each marriage is made up of very different contributions and it is for this reason that the Court will look at each relationship on its own facts. There is no hard and fast rule.
The Court will take into account all of the contributions made by both of you and can take into account contributions that may have been made by others (such as your extended family) on your behalf.
STEP THREE- WHAT ELSE SHOULD THE COURT TAKE INTO ACCOUNT?
The third step involves the Court looking into a crystal ball to consider your future. Here the Court considers a long list of matters such as-
- Your age and state of health
- Your children, their age, their needs and who will be caring for them
- Your income, your partner’s income and how this may be affected after the property settlement
- The effect (if any) that the marriage has had on your or your partner's ability to earn an income and obtain employment
- Any other matters the Court considers relevant in your marriage
STEP FOUR- IS THE OVERALL DIVISION FAIR?
Finally, after weighing up contributions and all the other factors that are relevant to your case the Court will come to a decision (normally in percentage terms) about how your property should be divided between you.
There is no precise science to reaching a decision as every marriage is different, however the Court must be satisfied that the division is ultimately ‘just and equitable’, or fair.
There is considerable difficulty in predicting with certainty the likely outcome of an application for property settlement.
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