When a magistrate looks at determining a property split and possible spousal maintenance for a couple, the following four-step-process is applied:
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Identify the assets, liabilities and future financial resources of the parties
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Assess the contributions made by the parties
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Evaluate each party’s earning capacity and future needs so far as they are relevant
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Make or seal orders made for a split of the assets and liabilities and any arrangements for ongoing financial support which are ‘just and equitable’.
Generally, a court will refer to a property split in terms of the percentage of the overall assets awarded to each party. So far as we can determine, there is no principle of family law that says the split should start from a position of 50/50 and deviate on the basis of influencing factors however that is the generally accepted practice.
Of course, there is no black or white answer and each case is considered on merit by the judge of the day.
A 60/40 property settlement without maintenance on one day could easily be a 55/45 split with maintenance when heard before a different Magistrate because of such factors as personal variances in the overall interpretation of the law, the magistrate's view of the contributions by each party or the emphasis and flow of information and questions between the legal representatives.
However, it is unlikely for one magistrate to rule wildly different than another. It is also unlikely for qualified lawyers to advise you and your ex-partner of wildly different outcome scenarios provided, of course, that both lawyers are working from the same set of information.
You and your former partner should take qualified advice and then aim to follow the four-step process to arrive at an agreement that would fall within the same range as a Family Court magistrate might rule, without incurring all of the cost of court appearances and fees due to the involvement of lawyers, forensic accountants, psychologists, or other third parties. Don't underestimate the cost of lost opportunities throughout an extended period of litigation proceedings. Sometimes it is far more valuable to you to accept an agreement that may not be exactly what you think you should get but at least you will be free to move on independently with your life.
Identifying net assets
The net asset value of the marital pot is the value of all of your assets less all liabilities.
List all of the assets you have within the partnership whether they are owned jointly or by one of you individually. Include any assets that are jointly owned with third parties. List all liabilities you currently owe, either jointly or individually. For the purposes of the initial assessment, anything acquired before or during the marriage, as well as post-separation is included.
Generally, if you owned assets before you were married, these too are deemed to be part of the joint asset pool. If you have been married for a very short period of time, this may mean you could retain assets you held personally before the marriage in the property split but you will need to seek expert assistance.
One of the first points of agreement you will need to reach with your ex, is the current value of each asset and all of the outstanding liabilities. If you can't agree on a valuation, you may need to engage a professional valuer, this is particularly the case with real estate and business interests.
The Redbook Online gives free vehicle price guides and offers an individual vehicle valuation for under $25 if required.
You may wish to include household items. Household items are not counted at their present replacement cost. These items are valued at their second-hand value; what you would get for them were you to sell the item through a market such as eBay, a second-hand dealer, auction, or a garage sale.
You should also consider all other financial resources, including superannuation, and any business entities over which either of you have influence, control, or prospective entitlements.
Accurate valuation of assets may mean you'll have to take into consideration issues regarding possible taxation liabilities, stamp duties, and the appreciation or depreciation of asset values.
Valuations can get quite complex where there’s joint ownership of assets with parties outside the relationship or elaborate trust and company business entity structures. You may benefit from engaging the services of a collaboratively trained financial advisor.
If you’re unable to reach an agreement as to the value of any asset, the Court may appoint a valuer to do so for you, and you may be required to share or pay the full costs of obtaining that valuation report.
In most cases, determining the net asset pool and making a start at negotiating a property settlement offer should be a task you can perform with The Split Kit and without professional assistance.
Identifying Contributions
You will need to assess and document the contributions of a financial and non-financial nature made by both you and your former partner. This information will be included in your affidavit to file for consent of property orders and will be one of the first questions a family lawyer will have for you before they can offer you advice. To help you to complete this information, download our free Summary of Significant Events form.
You should include all manner of contributions made before and during the marriage as well in the period post-separation. There are several types of contributions that may have been made by either spouse.
The court considers all of the following:
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Financial contributions
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Non-financial contributions, such as a homemaker, primary carer of children, or renovations to homes or other properties
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Gifts, bonuses, and inheritance
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Initial contributions, such as assets attained before marriage.
When establishing the contribution of each party to the joint financial pool, the Family Court attributes significant value to domestic duties, where one person has assumed the majority of domestic duties and child care.
In special circumstances, the Court may also take into account an exceptional skill one party has, such as the development of a patented product, if that exceptional skill has resulted in the primary source of significant wealth creation for the family.
Identifying ongoing financial needs
Were your property settlement to be decided by a Court, the following factors would be taken into account when determining the future financial needs for each of you:
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Age
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Health
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Future parenting responsibilities, including the needs of the children and the capacity of each parent to provide for those needs.
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Current income
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Earning capacity and the likelihood in terms of physical and mental capacity for each person to be gainfully employed
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The property and assets of each party
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Any pre-agreed commitments to children such as education, vehicles, etc.
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New de facto relationships and the combined financial resources of that couple
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Any existing care or financial responsibility either party has to support other people
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Child Support commitments
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Eligibility for future financial resources such as pension, super or other benefit
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Commitments of either party that are necessary in order for them to continue to generate an income
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The impact of any Orders on the ability for either party to service existing debt
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Any other circumstance that would significantly impact either party financially, which the judicial officer deems relevant.
What is fair and equitable?
The Court will try to arrive at a property split between you and your ex-partner and provision for ongoing spousal support, if it is necessary, that is fair and equitable. Fair and equitable is sometimes also referred to as just and equitable.
It is important to note, that ‘fair and equitable’ may not necessarily equate to an equal share of assets to each party.
You only have to read through the real life divorce stories on this site to see that an unequal division of assets plus an order for spousal support may not seem fair and equitable to some.
A hard working spouse of a 20-year marriage who has no desire to divorce may not think it 'fair and equitable' to be ordered to part with 60% of the family home and half of his or her superannuation, plus pay spousal support to a spouse who is less financially solvent, has been unfaithful, and is the one who wants to leave the marriage.
Similarly, a person who already had equity in a house when they married and is forced to lose 50% of that home and 50% of the time with their children after a 7 year marriage may not see that as a fair and equitable split.
However, with the introduction of no-fault divorce, the ruling in a property split will generally exclude any consideration of whose fault it was that the relationship ended and only consider each spouse’s specific economic circumstances during the marriage and concentrate almost exclusively on splitting the asset pool available at the time the case is being heard.
When a court determines that one spouse would be at a significant economic disadvantage post-divorce, it can use its fair and equitable discretion, to adjust the ratio of the split in favour of one spouse.
Courts will try to leave the parties on as equal economic footing as possible and try to prevent significant negative long-term financial consequences for either person.
If there are children involved, significant consideration will be given to ensuring the children will be able to enjoy a similar standard of living when spending time with each parent.
Some of the factors the court might consider in awarding more of the assets to one party, award the retention of pre-marital property, or to make an order for spousal support are:
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The length of the marriage
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A spouse's contribution as a homemaker or as a stay-at-home parent
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The skill set and earning capacity of each spouse
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The respective financial needs, especially considering parenting duties
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The relative health and/or disability of each spouse
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Any specific carer duties each spouse make have that would impact on their ability to earn a living
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Absence from the workforce and loss of commercial skills in order to support the other spouse
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The previous standard of living of the couple in relation to the standard of living that is considered reasonable for each party going forward
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A spouse's contribution to the other's education or earning ability (for example one person supporting another through a degree into a high paying career path)
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Whether one spouse's efforts caused a premarital asset, normally not subject to division, to appreciate, for example, time spent fixing up a spouse's premarital home or helping with landlord duties related to the property
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The financial resources which cannot be split but would become available to each party in the future, for example, some forms of superannuation, trust income, future options
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Whether one spouse has a specialised skill set or activity, such as a patented idea or product, pending contracts, which will result in significant financial gain.
In rare circumstances, a spouse may be compensated for their ex-partner's behaviour and 'fault' might be considered to award more of the property share to the spouse who has been wronged.
Such cases might include:
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Financial wastage of a business or assets
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Crime or fraudulent disclosure of assets
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Addiction specific activity of one spouse which resulted in the depletion of family resources
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Failure to provide support for a family
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Family violence and abuse.