WHAT’S A PROPERTY DIVISION / PROPERTY SETTLEMENT?
A ‘Property Settlement’ is simply the term used to describe the process of dividing the assets, debts and superannuation entitlements of couples who have separated. Such assets, debts and superannuation entitlements are collectively known as ‘the property pool’.
HOW DO LAWYERS GAUGE PEOPLE’S ENTITLEMENTS?
In determining what a person is entitled to in a property settlement, lawyers are guided by the question of “what division would the Court order if this matter went to a contested Court hearing?” This isn’t because lawyers want matters to proceed to a contested Court hearing; rather it’s because if negotiations between parties break down, the only option those parties have is to ask the Court to decide on their entitlements.
WHAT FACTORS ARE CONSIDERED?
In a nutshell, the main factors that must be taken into account are:
- what assets, debts and superannuation entitlements each party brought into the relationship;
- what financial input each party had during, and after, the relationship (e.g. payment of bills and groceries, use of savings to purchase property et cetera);
- what non-financial input each party had during, and after the relationship (e.g. renovations);
- what input as homemaker and parent each party had during, and after the relationship (e.g. carrying out home duties and caring for the parties’ children); and
- what each party’s future needs are having regard to their incomes/income earning capacities, ages, state of health, obligation to care for children of the relationship under 18 et cetera.
HOW ARE THE FACTORS APPLIED?
The Court considers the abovementioned factors in a four-step process. The steps are:
- identify the current property pool (assets, debts and superannuation entitlements now) and assign a ‘market value’ to each item;
- consider the parties’ contributions (detailed in the first four dot points above) and assign a percentage of the property pool to each party based on those contributions;
- consider the parties’ future needs and possibly adjust the percentage assigned at step 2 to take those future needs into account; and
- ensure that the proposed division is just and equitable (for example, don’t order the transfer of a $500,000 mortgage to a party surviving on a Centrelink pension).
This article was published by Kyle Barram on 2 March 2016. Kyle is a family lawyer, criminal lawyer and wills & estates lawyer practising out of Townsville.