Once a de facto or married couple separate, they will usually need to go through the process of a property settlement. This is to work out how their assets and liabilities will be distributed. This process involves 4 steps.
Identify the property pool. List all assets and liabilities and a second hand, real market value for each item, including houses, cars, shares, bank accounts and superannuation.
Consider the contributions of the parties, including financial (for example, by way of income or an inheritance) and non-financial (for example, if one person spent a lot of time renovating a home to increase its value). Contributions towards the family, such as completing the housework and caring for children, are also considered.
Consider the future needs of each party. At this step, each person’s age, state of health, earning capacity and their future obligations to care for dependants, are some factors that are considered. This step is to work out whether one person may need more of the property pool than the other, as they have greater future needs.
It must be determined whether the agreement is ‘just and equitable’ (i.e: fair). Regardless of whether people reach their own agreement, or whether a Judge is required to make a determination, the above steps are applied. It is best to have any agreement put into Consent Orders, to protect your assets in the future. Other benefits to Consent Orders include a stamp duty exemption if you are transferring a home.
Every case is different. It is important that anyone going through a property settlement obtains independent legal advice, specific to their circumstances, even if an agreement has been reached. Various factors in relation to the future needs of both persons will also be considered. Every situation is unique. It is important that proper legal advice is obtained; specific to the individual’s circumstances.
Mythbuster – Assets are always split 50/50: There is no automatic presumption that assets will be divided on a 50/50 basis. A number of factors must be considered, regardless of whether a matter proceeds through the Court process, or the parties reach an agreement. Factors include the contributions made, both financial and non-financial, including completing homemaker duties and caring for the children.