On separation you may have concerns about what will happen to your home, your mortgage, your business if you are running one particularly with your spouse or partner, what will happen to your and their superannuation, loans from your family and many other things that may be relevant to your financial position.
In Australia property division between married couples on either of their instigation or property division between couples in a de facto relationship where that de facto relationship has irretrievably broken down and the de facto’s have separated are determined by applying the provisions of the Commonwealth Family Law Act 1975.
In Australia there is no mathematical formula for dividing up assets that a couple have.
In Australia there is no concept of “community property” or equal division of assets as a starting point.
In Australia the property division split between married spouses and separated de facto spouses have the same considerations that are to be taken into account.
Determining your property division
In Australia there are 4 steps that the Court must go through in determining your property division and therefore these are also the 4 steps that your Family Lawyer needs to go through to assist you in working out an appropriate property division between you and your partner.
Step 1
The 1st step is to identify your asset pool. This includes all property, shares, cars, boats, caravans, money in bank accounts, debts including home mortgages, personal loans, leasing of cars, credit cards et cetera. It also includes each of your superannuation funds and their current balances.
Step 2
The 2nd step is to value all items in the asset pool at the time of looking at your property settlement. It is not what balances or things are valued at at the date of separation, which will be in the past. It is the date of any negotiation or the date of going to Mediation or Court to have an outcome for your property settlement.
Step 3
The 3rd step is then to identify all of each party’s contributions toward getting that asset pool. Those contributions may include what we call “negative contributions”. Those contributions include contributions made at the start of your relationship, during your relationship and after separation.
The contributions taken into account are direct and indirect financial contributions made by either of you or by someone else because of their relationship with you towards acquiring, keeping and/or improving any item of property that you have. Homemaker and parent contributions are also taken into account. Other factors such as your respective incomes and abilities to work, whether either of you has the care of any children of your relationship, whether either of you is paying child support to the other and other factors that Family Lawyers generally identify as your “future needs” factors are also taken into consideration.
Step 4
The 4th step is then to look at what the split may look like and take an overall view of it and whether that split is fair or would be considered by the Court to be fair or not.
The property split can be agreed between you however your Family Lawyer still needs to go through the 4 steps to see if what you’ve agreed to is within the range of what a Judge would do if your matter had not been agreed to and it had to be determined by the Court.
The agreed property split can be agreed between you either with or without the assistance of a family lawyer. The agreed property split can be agreed between you by negotiation, by attending Mediation, Family Dispute Resolution or other alternative dispute resolution services. If the property split cannot be agreed between you it can be determined by Arbitration or by proceeding to Judicial determination.
Court orders
In Australia to have finality of your financial separation and division of your property, you may need have Court Orders made (particularly if you are wanting any transfer of real properties, shares or other assets, superannuation splits and other things) or you can enter into a Financial Agreement that complies with what is required for these type of agreements pursuant to the provisions of the Family Law Act 1975.
Your family lawyer will be able to advise you on which of these forms of legal documentation is best suited for you and your particular circumstances.
Court Orders can be made by consent or can be made by the Court as determined by the Court or can be made by the Court as an Arbitral Award as determined by an Arbitration convened and conducted pursuant to the requirements of the Family Law Act.
Before making any Court Orders even by Consent, the Court must still go through the 4 step process and may not make Orders for what you and your partner have agreed to if the Judicial Officer considering what you have agreed to considers that the terms of your agreed property split are not within the range of what a Judge would do if they had to decide your matter. It is therefore important that each of you get independent legal advice about your situation.
In Australia if you are a married couple, if you need to have a determination of your property split and or a spousal maintenance claim, you need to start Family Court (now known as the Federal Circuit and Family Court of Australia) proceedings\Court action within 12 months of the date of your divorce becoming final. You can only make an application after the expiration of that 12-month period if the other party agrees or if the Court determines that you can have permission to proceed with it after that time has expired.
In Australia if you are in a de facto relationship, if you need to have a determination of your property split and\or a spousal maintenance claim, you need to start Family Court (now known as the Federal Circuit and Family Court of Australia) proceedings\Court action within 2 years of the date of your final separation from the other party. Sometimes the date of separation is in dispute. You need to be mindful of what the other party says the date of your final separation is if it differs from the date you say. You can only make an application after the expiration of that two-year period if the other party agrees or if the Court determines that you can have permission to proceed with it after that time has expired.
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Helpful tip for your first meeting with a family lawyer
In starting to look at what your property division may look like and getting some family law advice, we recommend that for your first meeting with your family lawyer, it is useful for you to bring information and copies of any documents you have or are able to gather that are relevant to the issues in dispute between you and your spouse or partner that you want to get advice about and resolution on. This is because the 1st step in determining what you may get on your property settlement is based on what is in your asset pool.
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Prepare an asset list
Prepare and bring a list of your and your spouse or partner’s assets and any supporting documents that you have. The supporting documents without listing each and every of them may include:
- For your home and any other real property that either of you have an interest in, the full address and postcode of each property owned by both or either of you. Get a couple of recent market appraisals by real estate agents and bring them with you so that you have a realistic idea of what each property’s current value may be. Valuation of your property by your local Council for assessing your rates are not used in family law matters and are not accepted by the Court as evidence.
- If you or your spouse or partner have any interest in any family trust, business or company bring any documents that you are able to get in respect of them with you. For example, for a Family Trust this may include the Trust Deed, generally the last 3 years to date of any Financial Statements that have been prepared for the Trust (which should include profit and loss, balance sheets, depreciation schedules and the like) and the Trust Tax returns for last 3 years they have been prepared for. The same may apply to any business or company.
- If you or your spouse have superannuation or a self-managed superannuation fund bring each of your most recent member statements which include the current balance of each of your benefits.
- Documents relevant to income. Bank statements for all joint and separate accounts for at least the last 12 months, your and your partners 3 most recent Individual Tax Returns and Notices of Assessment, contracts of employment if applicable.
If in doubt ask and we can assist you in identifying what documents you may have or may be able to gather that will be relevant to your situation.
The information in this article is accurate as at 3 October 2024. There are changes currently under consideration by our Parliament as to other matters they propose to also be taken into account in determining any property split. The proposed changes include taking into account as a consideration in any property split any family violence. Your family lawyer will be able to advise you at the time of whether these changes have come into effect or not, and of any other factors that will then also be required by our laws to be taken into consideration in your financial settlement.
