How is property divided in divorce?
While no two divorce settlements are the same, there are some key things you need to understand about how property might be divided in a divorce.
Our family lawyers in Perth explain what you need to know about how property is divided in divorce.
What is classed as property in a divorce?
In a divorce, all assets and liabilities owned by both spouses are classed as property, regardless of in whose name they are registered.
Assets comprise of all properties including the family home, businesses, bank accounts, cash in the bank, vehicles, household contents, art, jewellery, investments, insurance policies and even your superannuation.
Liabilities include all debts, such as mortgage loans, personal loans, tax and credit card debt.
It is absolutely crucial for both parties to disclose all assets and debt truthfully and accurately, as it can have dire consequences if discovered at a later stage that one partner hid any asset or deliberately valued it incorrectly.
How do I work out our property pool at separation?
All the above-mentioned items are valued and placed into the total property pool, which will be split following your separation.
Is there a set formula for dividing property in divorce?
As all divorces come with their own unique set of circumstances, there is no one set formula that applies to all couples and their divorces.
However, Australian Family Law demands that the division of property must always be just and equitable to both parties. This does not mean that everything will be split straight down the middle.
If a Binding Financial Agreement (BFA) is in place, it makes life far easier for everybody, as the terms of the splitting of properties are clearly laid out and already agreed to. But if no BFA exists, it can become a highly contested process, requiring professional legal and financial assistance.
What does the Family Court take into account when it comes to property division in divorce?
The Family Court may take several factors into consideration before reaching a decision that is just and equitable. These can include the following:
- The valuing of all assets and liabilities.
- The length of the marriage.
- The direct financial contributions made by each partner during the marriage and noting the values of assets brought into the relationship by each partner. These may include gifts or inheritances.
- The indirect contributions made by each partner. This includes keeping a home and raising children. This is to ensure that stay-at-home parents are not disadvantaged.
- The earning abilities and financial resources of both partners.
- The age, health and future needs of each partner and their children.
Do the same rules apply to married couples and de facto relationships?
The quick answer would be yes. Evidence must however, be provided showing that the de facto relationship has existed for more than two years, or a child has been born from this relationship.
Can we decide how to divide our property or does the Family Court have to decide for us?
Australian Family law encourages both parties to negotiate between themselves as far as possible as to who gets what, before rushing off to Court. The more issues that can be agreed on between the parties, the quicker and the smoother the divorce process will flow.
Although family law mediation is not mandatory for property or financial matters, mediators are invaluable and extremely capable of assisting separating couples in the division of their property. Throughout the process, they remain totally neutral, while offering unbiased guidance to both parties. They explain the legal rights and obligations of both parties, enabling them to resolve their own differences and reach an amicable agreement that suits their particular needs.
Once an agreement is reached at mediation, the mediator will draw up the agreement and file it to the Family Court for a consent order. This will make the agreement legally binding and enforceable. If parties cannot reach agreement on all their disputes, the unresolved disputes will have to be taken to Court where a magistrate or judge will make the final decision for them.
The partners themselves will however, have to make the decision on the living arrangements, such as who will stay and who will go, or if the family home is to be sold and net proceeds shared.
At Hickman Family Lawyers, we deal with a range of family law issues including division of property and drawing up binding financial agreements at all stages of relationships.