Is Everything Split 50/50? How Property Is Really Divided in an Australian Separation
In Australian family law separations involving property or financial disputes, there is no automatic right to 50% of the net asset pool and there is no mathematical formula or standard entitlement for either spouse. A property settlement depends on the circumstances of the relationship, and must produce an outcome that is just and equitable, or in other words, it must be fair in the circumstances of the relationship.
While some countries such as the UK, South Africa or certain states of USA have a starting point of 50/50, that is not the case for Australia. While a 50/50 split of the property may be appropriate in some matters, the same can be true for a 70/30 property settlement where the circumstances of the whole matter support such an outcome.
It is important to remember that divorce in Australia is different to a property settlement, where divorce only relates to the ending of a marriage, and a property settlement addresses the division of matrimonial assets.
How are assets split after separation?
The Court will generally apply what is known as the ‘4 Step Process’ when considering how assets are split, with this being reflected in section 79 of the Family Law Act 1975 (Cth). Importantly though, it must be ‘just and equitable’ for there to be a property settlement in the first place, and simply being in a relationship does not necessarily mean a property settlement will occur.
The process will generally begin by first identifying and valuing all current property, assets, liabilities, superannuation and financial resources held by, or on behalf of the parties. Following the identification of the pool available for division, the contributions made by each party to that pool are considered, which includes financial contributions (wages, inheritances, assets brought into the relationship), non-financial contributions (maintenance and improvement of an asset, unpaid work in a family business) and parenting and homemaking contributions. Importantly, contributions post-separation are also considered as a property settlement is determined at the date a decision is made, and not when the parties separate.
Once an assessment of each parties’ contributions has occurred, there is a further consideration of each person’s present and future circumstances, which may include a consideration of a party’s age, health, income and earning capacity, care of children, financial resources and the economic effect of family violence where relevant.
Lastly, and at the end of the above process, a Court is still required to ensure that any agreement or property settlement is just and equitable in all of the circumstances.
What Am I Entitled To in a Property Settlement?
In Australia, neither party is automatically entitled to half of the pool available for division, to keep the assets in their own name, or to receive a particular percentage. Legal ownership is relevant, but it does not decide the final division as the Family Law Act has the power to alter the legal ownership of assets.
Furthermore, there is no set formula for a property settlement, and a judge determining any matter has a wide discretion as to what either party should receive. Due to this, a practical estimate of the range of entitlements a person may receive requires reliable valuations, full financial disclosure and a careful assessment of both parties’ contributions and future needs. Accordingly, your entitlement is fact and matter specific, where no two cases are the same.
What does “Just and Equitable” mean?
The final step in determining how your asset pool will be divided, is whether the proposed division is just and equitable in all circumstances of the matter. This is effectively a final fairness check, and looks at the real and practical effect of the proposed division, not just a percentage in isolation. For example, if a 70/30 settlement was assessed but this would leave the other party with no tangible assets or ability to rehouse themselves, the proposed division may be adjusted as necessary.
Family Violence
Family law settlements and outcomes are highly fact-specific. If you are considering a settlement or are in the process of separating, our team at Dorter Family Lawyers & Mediators are able to assist you.
