In Australia, data shows that countless relationships end in divorce or separation. With the increasing number of relationship breakdowns, there are numerous misconceptions and misinformation when it comes to answering the queries of “who gets what” in the settlement of properties after a separation or divorce.
As a matter of fact, there are no hard and quick rules or guidelines as to which party may get more in the event of a relationship breakdown. The truth is that every case is distinct on its own facts and will vary from the end result in the matter before and after it.
With that being said, in this article, we’re going to discuss who gets what and how property settlements during a divorce work in Australia.
Common Misconceptions of Divorce Property Settlement
Unfortunately, there are several misconceptions of who gets what and how. Here are some of the most common ones:
All are split down in half. The truth is, there is no 50/50 rule in family law asset matters. Plus, there is no mathematical formula that exists for properly dividing property between parties. It is more about a noncompulsory decision that is based on a number of factors that are set forth in the Family Law Act.
Men usually come off “second best” financially after separation or divorce. There are some websites devoted to this topic and they help encourage this myth. Although this might be the case for some men, repeated researches that compare women and men after divorce show this is not the actual case. The study shows that men usually tend to recover faster when it comes to finances after a divorce or separation but more slowly emotionally. This is because men are able to continue with their full-time jobs and career paths without getting interrupted by child-rearing.
When men can stay in the workforce during the entire period of their marriage or relationship, they usually have a network of employment contacts that allows them to earn salary increases or other employment. The opposite is normally true for females and it is because they have the bigger responsibility for child care. A lot of negative economic consequences flow from this happening.
You need to proceed to court to get a property settlement. Well, this is just another misconception as statistics show that only 5% of those who experience a relationship breakdown actually settle in court. The rest of the affairs will resolve through consent, usually as a result of a mediation, and in other aspects by way of solicitor negotiations. After both parties come to an agreement on how they want to divide their assets by consent, an application for consent order can be created, and while the court must assess and approve the orders solicited, parties are, in those situations, never necessitate to step foot through the entrances of the court.
Assets and Liabilities of Both Parties
Here are the factors considered for what common assets and liabilities are included:
- Investment properties
- Family house
- Mutual funds and bonds
- Shares and stocks
- Cars and boats
- Family trusts
- Personal property including collectables and jewellery
- Business interests
- Household items like televisions, furniture
- Personal loans
- Home mortgage
- Car loans
- Business loans
- Credit card debt
- Hire-purchase agreements
Process of How Assets Split
It’s crucial that you know that property settlement and divorce are two distinct legal processes. A property settlement is the division of property in a formal manner following a couple who ends a marriage. A divorce is the lawful ending of the marriage. The division of the assets can happen whilst parties are living together and are concluded prior to their divorce being finalised and even whilst they carry on living together, though this is rare. You might want to hire lawyers on the central coast to help you out.
First Process: Valuing the Assets
The first step is for the assets, financial resources, and liabilities of the couple to be identified and valued, regardless of whether they are obtained before or throughout or after divorce. Assets can involve anything that has value including cars, savings, shares, real estate, inheritances, redundancy packages, compensations, jewellery, lottery wins, and other personal/real property.
The parties’ individual superannuation welfare are included in the pool of assets and identified as an asset except if one of the parties has superannuation benefits overseas, in which case it is determined as financial wealth.
Second Process: Assessment of the Contributions of Each Party
After the total net pool is determined and valued, the non-financial and financial contributions of the parties flowing into the relationship, throughout the relationship and past the relationship are assessed and adjustments are made to the pool correspondingly on a percentage basis.
In a short term marriage with no kids, it is normally the pre-cohabitation contribution that is important. Financial contributions are the direct or non-direct contributions to the conservation, acquisition, or improvement of any of the property of the parties or either of them and may add cars, real estate, gifts, inheritances, income, dividend payments, redundancy packages, compensation, and more.
On the other hand, non-financial contributions include any non-direct or direct contributions given to the conservation, acquisition, or improvement of any of the property of the parties or to the welfare of the family. This may involve parenting, homemaking, enhancing and preservation of the matrimonial home through one’s own labour like landscaping, renovations, or repainting and more.
Third Process: Computing Future Needs
The next step is to compute the future needs of the parties. This includes considering a range of factors like health, income and earning capacity, support and love for children, financial resources of parties, and financial circumstances of any new relationship. During this phase, the court reviews whether any adjustments must be made to the pool taking into account the parties’ future needs.
Fourth Process: Taking Into the Account the Practical Effect
The last step is to consider the practical effect on the suggested property settlement. If the circumstances proceed to the court, this may involve the court sitting back and deciding whether the result of the above three steps is fair and just in all aspects of the matter. Nonetheless, the effect of your property settlement will be based on your practical circumstances, judicial resolution in this field being elective.