In a perfect world, couples would amicably agree about ‘who gets what’ in a divorce. Unfortunately, that’s not the scenario for many divorcing couples.
Some issues at large in the individual case can see parties in disagreement about how to divide their cumulative wealth. Sometimes those issues are so complicated that it takes a long battle to work it all out.
What happens if you can’t agree?
In that case, a specific legal process gets triggered.
The objective under Australian law is a just and equitable outcome. No, that doesn’t necessarily mean that money and assets are split 50/50.
What it does mean is that the court takes a number of factors into account to ensure a ‘just and equitable’ outcome is delivered to each partner, by undertaking the following decision-making process.
1. Calculating the assets, liabilities and financial resources
The first step is to compile a list of assets, whether owned jointly or separately, and their value and liabilities, and their extent. As part of the process, you’ll be expected to truthfully and accurately declare your financial position.
As well as obvious ‘bricks and mortar’ assets, the asset pool may include items such as vehicles, jewellery, artwork, antiques, shares and inherited assets.
Liabilities may include any debts, mortgages, loans and tax liabilities. Financial resources may include a pension or superannuation fund, an anticipated inheritance, or an interest in a trust fund or business partnership.
If you purchased a property during the marriage, note that property settlement is a separate legal process from your divorce settlement.
2. Assessing each partner’s financial and non-financial contribution
Once the asset pool has been determined, the next step is to determine each person’s financial and non-financial contributions to acquiring, conserving and improving the items of property in the asset pool, and their contributions to the welfare of the family (comprising the parties, and any children).
These things come in many forms, ranging from the application of wages to the payment of a deposit on property purchases, using inherited funds to retire debt or purchase investment properties, committing time resources to renovating a property or working unpaid in a business (to grow the value of assets), and doing all that is necessary to run the household (home-making, parenting).
Proving these contributions is assisted by evidence such as documents. Weighing and balancing contributions of different kinds can be tricky in shorter marriages, but over longer periods of time, it is often the case that the division of labour between spouses (whether a financial or non-financial role) ends up being treated equally.
Your family lawyer will be able to help you with identifying contribution, and building evidence around them, to put your best foot forward.
3. Determining future financial needs
To arrive at a settlement which is just and equitable, the court will also take each spouse’s circumstances, as affected by the division of roles during relationship, and standing separately from their spouse, into account.
These factors can include:-
- Age – is one party older than the other, such that, for example, they are retired and earning no income, of their remaining time in the workforce is less?
- Health – is one party prevented from working because of a health condition, or do they incur significant health care costs in the management of a condition?
- Income and earning capacity – has one party’s income earning capacity become ‘dated’ while they have been out of the workforce, fulfilling a childcare or other role (while the other spouse has been in the workforce, developing and advancing their career)?
- Who the primary caregiver of the children is – will a primary parent’s childcare responsibility have the consequence that they cannot work (part-time, or at all)?
- Financial circumstances as a result of a new relationship – is a party being supported financially in a separate relationship?
It is also at this step that any conduct of the parties which has had some ‘negative’ impact on the asset pool, or if one party has had an early access to capital (not also enjoyed by the other spouse), can be taken into account – again with a view to achieving justice and equity in the case.
While these factors are not exhaustive, they are considerations which arise regularly following a separation, precipitated when two spouses are no longer in a united relationship. An adjustment, expressed in percentage terms in favour of a spouse, can be made to the contribution-based assessment from step 2, to take these sorts of realities into account.
4. Ruling on a just and equitable division of assets
The final step is to confirm that, based on the factors outlined above, the division of assets is just and equitable.
It is here when a decision-maker examines the outcome with the following sorts of factors in mind – does the cumulative effect of the contribution-based entitlement and the adjustment factors require tweaking against the background of the facts of the case; are there tax and revenue consequences for a spouse arising from the movement of assets which must be taken into account; is one party left with too high a proportion of the superannuation assets, or assets which are pregnant with tax liabilities.
The final outcome can be tweaked to accommodate these things.
Note: The property settlement is a separate legal process from your divorce – you can complete the division of your property interests with your spouse before or after divorced (note that doing it after divorce, some statutory time limits apply, which you must work within)
Why you should hire a specialist family lawyer
Dividing assets after separation is seldom a cut-and-dried exercise. Issues which are ‘live’ in one case, may be irrelevant in the next.
Further, there can be outcomes you might not have expected at large – for instance, you might assume you will automatically be ordered able to retain an asset that is held or registered in your name, but that can’t be guaranteed.
Each case is unique, and will be treated as such. A range of family law services by an experiened family lawyer may be required to assess your own situation objectively, identify the factors which will have relevance in your case, and help you with negotiations to reach a fair settlement.
Get in Touch
BGM Family Lawyers is a specialist family law firm serving the Gold Coast. We’ve helped many couples navigate a divorce settlement and we can help you too.
Get in touch by emailing info.bgm@bgm.legal or calling 1300 246 529.
