In Australia, settling property after the breakdown of a marriage (or de facto relationship) is a crucial task that can affect both parties’ futures. Understanding how to divide assets and debts fairly is essential for a smooth and amicable separation. This article will guide you through the process of property settlementsin Australia, explaining the types of property involved and the factors considered in reaching a settlement. By the end, you will have a clearer understanding of what to expect and how to navigate this aspect of divorce with confidence.

What is a Property Settlement?

Property settlements in family law refers to the process of dividing assets, liabilities (sometimes superannuation) between separating parties following the breakdown of a relationship, whether it is a marriage or de facto relationship. 

How is Property Usually Divided in a Divorce?

When lawyers, or the Courts, embark on the process in determining how property should be divided following the breakdown of a relationship, they apply what is known as the “four-step process”.

This four-step process includes: 

1. Ascertaining the Net Asset Pool.
2. Looking at the parties’ contributions (both financial, non-financial and homemaker).
3. The future needs of either party; and 
4. Effect of the Distribution and whether that effect is Just and Equitable.

Net Asset Pool 

The first step is ascertaining the net asset pool. This is calculated by adding the gross value of all assets and superannuation and subtracting the parties’ liabilities. 

Assets can include, businesses, real estate, cars and even shares. 

Liabilities can include, mortgages, credit cards and car finances. The Court also looks at the financial resources of the parties, for example, whether there is an imminent inheritance one party is expected to receive.

Contributions (Financial and Non-Financial)

The next step is assessing the parties’ contributions at the commencement of the relationship, during the relationship and post separation. 

This step looks at both financial, non-financial and homemaker contributions. 

• Financial contributions: include factors such as, who purchased property and who was responsible for making mortgage repayments. 
• Non-financial contributions: include factors such as any labour or physical improvements that were done by one party to a property, such as a house, which would have otherwise required hiring a contractor to do. This can include painting a house. 
• Home maker contributions: include factors such as who was responsible for the cooking, cleaning, washing and caring for the children. 

Future Needs 

The next step is to assess whether either party has a future need that would warrant an adjustment in their favour.

For example, factors that the court considers when assessing someone’s future needs includes but is not limited to 

1. Age of each party.
2. Health of each party.
3. The parties’ income and physical and mental capacity to earn an income.
4. The property of each party.
5. Whether there is care of control of a child under 18. 

It is within the Court’s discretion to take into consideration factors such as those itemised above, when assessing whether one party should receive a little bit extra from the asset pool, to ensure that they will be adequately provided for in the future.  

Just and Equitable Effect of Distribution 

The final steps are to determine whether the proposed property settlement or ‘split’ being sought is just and equitable in all the circumstances. To determine whether a split is just and equitable, it is imperative to consider and look at the effect of the outcomes made at stages one, two and three. 

Once you and your spouse have reached an agreement, whether that be through negotiations or mediation, it is imperative that you document your agreement, to ensure you protect your interests. This can be either by entering into Consent Orders or a Financial Agreement. 

The family lawyers at Meredith Lawyers can assist you in arranging and negotiating a property settlement with your spouse that is just and equitable for all parties, leaving you with the satisfaction that the decision you made is the right decision. 

If you are concerned about how to divide your property with your spouse following the breakdown of your relationship, seek early advice from one of our experienced family lawyers at Meredith Lawyers.  

For more information and advice on family law property settlements, contact one of our experienced family lawyers at Meredith Lawyers on 1300 537 306 or admin@meredithlawyers.com.au.