If the Court is called upon to make a determination in relation to the division of the matrimonial assets they must be satisfied that an outcome is just and equitable for both parties in the circumstances.
In order to determine what a fair and equitable division of matrimonial asset is, the Court has stated that the following process should be followed:
- Identify and value the net property of the parties (usually at the date of trial);
- Consider the contributions made by each of the parties as set out at section 79(4) of the Family Law Act (see below);
- Consider each of the parties future needs as set out at section 75(2) of the Family Law Act; and
- Consider whether the proposed order is just and equitable.
For the purposes of “Step 1”, property under the Family Law Act is considered to be all that is real and personal. This can include real estate, vehicles, shares, companies and even assets owned by a trust. It is important to note that superannuation is also considered “property” and is therefore calculated as an asset for the purposes of reaching settlement.
In order to assess the “Step 2” the Court relies on the factors outlined in section 79(4) of the Family Law Act. Here the Court looks at the financial and non-financial contributions made within the relationship, namely:
- Financial contributions made directly or indirectly by the parties towards the acquisition, conservation or improvement of any property i.e. income, gift or inheritance, or parent’s contribution towards the purchase of the matrimonial home.
- Non-financial contributions made directly or indirectly by the parties towards the acquisition, conservation or improvement of any property. Such contributions will include, for example, a person’s contribution towards the care of the children of the relationship and contributions made as homemaker etc.
It is important to note that in certain instances, for example wasting funds on gambling or unexplained expenditure, may be determined to be a negative contribution and work against a party at settlement.
In order to assess “Step 3” the Court considers a non-exhaustive list of factors outlined in section 75(2) of the Family Law Act. These factors focus on the future circumstances of the parties. Some of these factors include:
- The age and health of the parties;
- Income, property, and financial resources as well as the ability to obtain gainful employment;
- Who has the majority care and control of any children less than 18 years of age and the need to protect that party who wishes to continue the role of the parent;
- Responsibilities to support the other party either through child support or spousal maintenance;
- Whether there are any other financial resources such as superannuation, pensions or life insurance; and
- The length of the relationship, including the period of cohabitation prior to the marriage.
Only after giving careful consideration to steps 1 to 3 will the Court turn their attention to “Step 4” by determining whether the proposals presented by the parties are just and equitable.
There is a one year limitation period that operates from the date parties are granted a Divorce within which to commence proceedings within the Family Court or Federal Magistrates Court relating to a Property settlement. An application outside the one year period will only be accepted if the Court has granted leave to the applying party and is satisfied that the party will suffer a significant detriment if a property settlement is not completed.
Should the parties reach an agreement prior to the final hearing, then the matter is formalised through one of the following avenues:
- Consent Order – with the seal of approval of the Court; or
- Financial Agreement – which is upheld by the Court providing it is fair and equitable to both parties.
It is important to understand that the way property will be divided between you and your former spouse will depend upon your individual circumstances and may not be the same as others you have heard about.
A decision is based on the facts of your individual situation to bring about a just and equitable outcome in the circumstances.