Whilst many people believe the fair way to divide property between a separated couple is 50/50, there is an established five (5) step process that is used by the Court and followed by practitioners to guide out of Court financial settlements. In some cases, property may be divided 50/50 however this is not always the case, nor is there an assumption of the same.
The five step process in property settlement after separation
In summary, the five (5) steps are as follows:
1. Is it just and equitable?
Determine whether it is just and equitable to alter the existing property interests of the parties. In most circumstances, particularly in longer relationships or those with young children, this step will generally be satisfied.
2. Calculate the assets and liabilities of the parties.
This includes accounting for assets and liabilities in the sole names of the parties, the joint names of the parties together or the joint names of one of the parties and a third party. The types of assets considered are broad and include but are not limited to real property, shares, business interests, motor vehicles and superannuation. The liabilities considered are also broad and include mortgages, personal loans, credit cards, loans from family members and HELP debts.
3. Assess the contributions made to the property and the relationship by each party.
These contributions include initial contributions, special contributions, financial contributions, non-financial contributions, contributions to the role of homemaker and parent and post separation contributions. At this stage of the assessment, entitlements to property settlement are expressed as percentage share to each party.
4. Assess the future needs of the parties
The future needs include their age and state of health, income and earning capacity, care of children and care of any other dependants. At this stage of the assessment, a determination is made as to whether there should be an adjustment made to the existing percentage distribution as determined at step 2 of the process, based on the future needs of the parties.
5. Is it just and equitable in the circumstances?
Assess whether the outcome, as determined in the previous 4 steps, is just and equitable in all the circumstances.
Seek legal advice from one of our experienced family lawyers about the various types of agreements available and which type of agreement would best suit your particular circumstances. A lawyer can advise about which type of agreement (e.g. a binding financial agreement or consent orders) may be easier and more cost effective.
