It is a very common misconception that property pools are split equally in a divorce or separation and that each party will get 50%. While it certainly may be the case that it is fair in some circumstances for pools to be split equally, it isn’t a rule.
4 Step Process
The family court follows the below 4 step process for determining how a property pool should be divided:
- Identify and value all the assets, liabilities and superannuation of the parties
- Assess the contributions of each party
- Consider the future needs of the parties
- Consider whether the overall division is just and equitable in all circumstances.
Generally, all assets, liabilities and superannuation that either party currently has an interest in are included in the property pool. Parties have an obligation to provide full financial disclosure of all matters relevant to the property settlement. Once this process of disclosure is complete and any necessary valuations have been obtained the matter will be ready to proceed to enter into settlement negotiations or dispute resolution.
All the financial and non-financial contributions of the parties are considered at this step. This includes looking at what the parties' initial contributions were when they commenced cohabitation, their contributions during the relationship and any contributions made post-separation. All the contributions are assessed holistically and the court does consider that contributions erode over time. A percentage split based on contributions is calculated.
At this step, factors including the age and health of the parties, any disparity in their future income earning capacities and the care arrangements for any children of the relationship are considered. An adjustment will be made if it is necessary.
So what does this mean for me?
Family law is a discretionary area of law which means that if your matter is determined by a Judge, they have wide discretion in applying the 4 step process and determining a settlement that is just and equitable in the circumstances.
In reality, the vast majority of matters are resolved without the matter proceeding to court. To ensure you can resolve your matter as quickly and cost-effectively as possible it’s important to obtain legal advice early in the process.
Our family law team offers a free initial consultation to help you understand your entitlements. Contact us today for a confidential, obligation-free discussion.