A Family Law property settlement should be fair to both parties and recognise the contributions made by each party, and also each party’s future needs.
The Family Law Courts adopt a four-step approach to determining an appropriate property settlement. These four steps are:
- Identifying the assets and liabilities of the relationship.
- Assessing the contributions by each person to the relationship.
- Considering the future needs of each party.
- Considering whether the settlement is “just and equitable”.
The first step requires us to identify all the assets and liabilities of the relationship including houses, cars, bank accounts, superannuation, home loans and credit cards. This can be done by the exchange of disclosure documents between the parties, or by agreement between the parties.
The second step requires us to assess what contributions each person made to the relationship. There are three main categories of contributions:
- Financial contributions such as property that was brought into the relationship, wages received, gifts from family members, and any lump sums of money received such as inheritances and redundancy payments.
- Non-financial contributions such as work or renovations done to improve a property or managing an investment property.
- Contributions to the welfare of the family including domestic and homemaker duties and caring for the children.
In recent times, the “breadwinner contributions” and “homemaker contributions” have generally been treated as equal to ensure that the stay-at-home parent is not disadvantaged.
Once we have assessed the contributions made by each party to the relationship, step three requires us to consider whether either party has any future needs, and whether there should be an adjustment made to the contributions because of this future need. Examples of future needs include, ongoing care of the parties’ children, a disparity in earning capacity, and any ongoing health issues.
After completing steps one to three, we will have an idea of an appropriate percentage range of the property that a party is entitled to. If there is agreement between the parties about a property settlement, then we can prepare Consent Orders to be filed by the Court. If parties cannot agree on a property settlement, it may be necessary to commence court proceedings.
If the matter proceeds through the Court then we get to step four where the decision is in the hands of the Court to determine what is a “just and equitable” property settlement. It is possible that neither party will be happy with this decision.
If you have any questions regarding a property settlement or require assistance negotiating a property settlement with your partner or spouse you should contact a lawyer specialising in Family Law without delay.