The Courts approach to a Family Law settlement split
When considering an adjustment of the parties (husband, wife or de facto) assets and liabilities, whether in a marriage or De Facto relationship, the Court considers the following 4 steps: -
Identify the parties’ property, liabilities and financial resources and the parties existing legal and equitable interests in property;
Determine whether, in all the circumstances, it is just and equitable to make an order adjusting the legal or equitable ownership in the property;
If it is just and equitable to make an order, consider the parties contribution, including financial contributions, non-financial contributions, contributions as homemaker and parent;
Consider the factors listed under section 75(2) in the case of a marriage and Section 90SF (3) in the case of a De Facto relationship of the Family Law Act (“the Act”).
Steps 1 and 2: - Identify the parties’ property, liabilities and financial resources and the parties existing legal and equitable interests in property and determine whether, in all the circumstances, it is just and equitable to make an order adjusting the legal or equitable ownership in the property.
The Court considers the property, liabilities and financial resources (“asset pool”) of the parties whether married or in a De Facto relationship before, during or after separation and ascertains who has legal ownership of such property (for example, in the case of real estate, who is registered on title for real estate).
Assets include real estate, chattels, motor vehicles, shares, superannuation, interest in companies and trusts. Liabilities include a mortgage over the family home, car loan, loans from third parties such as parents. In this circumstance, the parent lending the money should have a loan agreement in place, keep a record of the money advanced to the child or consider registering a mortgage over a property. The child receiving the funds must have proof of the repayments.
The “just and equitable” requirement is satisfied in most cases where parties have voluntarily separated and are no longer enjoying common use of property.
The assets, including real estate and superannuation, must be valued as at the date of the and not at separation. Generally assets such as real estate, business and some superannuation interests are valued by experts in the area. For example, an expert in real estate will value real property and a forensic accountant will value interests in companies and trusts.
Step 3 :- If it is just and equitable to make an order, consider the parties contribution, including financial contributions, non-financial contributions, contributions as homemaker and parent.
Lawyers and Judges rely upon the Act when assessing the contributions of each of the parties to the assets and liabilities. The contributions identified in the Act are as follows:-
Financial contributions;
Non-financial contributions; and
Contributions made to the welfare of the family.
Financial Contributions
Financial contributions include such contributions made directly or indirectly to the acquisition, conservation or improvement of any of the property of the parties or either of them. This includes a party’s income, any money or assets they brought into the marriage (initial contributions) and any other financial contributions such as an inheritance received and a monetary gift.
Non-financial Contributions
Non-financial contributions relate to certain things done by either of the parties to maintain or improve property or a business. For example if one party renovates the family home, without hiring tradesman, is not paid for such renovations and as a result increases the value of the property or helps in a business , is not paid for his/her work and increases the value of that business.
When considering non-financial contributions, the Court will generally consider the value that the non-financial contribution has added to the net asset pool and/or the cost of hiring someone to complete that task.
Contributions to the welfare of the family
This includes daily homemaker duties such as domestic duties and caring for the children.
Some examples of contribution to the care and welfare of the family include:
Looking after children
Taking children to medical appointments;
Taking the children to extra-curricular activities;
Taking the children to school;
Picking the children up from school;
The Court will place weight on each contribution by the parties as it sees appropriate in the circumstances of the case.
Step 4 – Consider the factors listed under section 75(2) in the case of a marriage and Section 90SF (3) in the case of a De Facto relationship of the Family Law Act (“the Act”).
The Act lists a number of factors that the Court will consider in deciding whether to adjust the parties’ asset pool. The factors include:
The age and state of health of each of the parties;
The income, property, and financial resources of each of the parties;
The physical and mental capacity of each of them for appropriate gainful employment;
Whether either party has the responsibility of care or control of a child of the marriage younger than 18 years;
Commitments of either party to supporting himself/herself and a child;
The responsibilities of either party to support any other person;
The eligibility of either party for a pension, allowance, or benefit;
Reasonable standard of living in all circumstances;
Whether payment of maintenance would allow a party to increase their earning capacity by undertaking an educational course or training;
The effect of any payment on the ability of a creditor of a party to recover a debt;
The extent of contribution to the income, earning capacity, property of the other party;
If either party is cohabitating with another person, the financial circumstances of this;
The need to protect a party who wishes to continue that party’s role as a parent;
Terms of any orders made in relation to the property of the parties or vested bankruptcy property;
Any child support that a party to the marriage has provided or might need to provide in the future; and
Terms of any binding financial agreement needs to be taken into account.
Not all the above factors are relevant to all property settlement matters. At times, more than one factor is considered. At other times, none of these factors may be relevant.
The Court will consider the above factors, determine what adjustment to give for each factor and make a determination as to what order is just and equitable in all the circumstances.
If you would like to speak with one of our family law specialists regarding a settlement question then please call us on 03 95960222, your initial consultation is complimentary.
Author: Sanaz Naimi Roshan, Accredited Specialist in Family Law