Property division and its common misconceptions

Published 02 Jun 2014
Maryann Melhem

Property division and its common misconceptions

NOW THAT YOU AND YOUR PARTNER HAVE SEPARATED, WHAT ARE YOU ENTITLED TO? DOES THE COURT AUTOMATICALLY START AT 50/50? DON'T WOMEN ALWAYS GET MORE?

It seems that the 2 most common misconceptions amongst family law clients (in relation to property division) are firstly that the courts start off with a 50/50 division of the assets and secondly that women always "get more".

When deciding on a division, the court is guided by the Family Law Act 1975 and by other decided cases. There is no set "formula" or "benchmark" which the Court uses to establish a divide. Simply put, the Court needs to complete 4 steps:

1. establish whether a division of property would be just and equitable ("fair") in the circumstances;

2. identify and establish the value of the net property of the parties;

3. consider the financial and non-financial contributions of the parties (including contributions to the welfare of the family); and

4. consider other relevant factors outlined in the Act (including the effect the orders will have on the parties, the parties' financial resources, and whether or not there are children who will also be affected).

It was only recently that the Court began looking first at whether the relationship and the circumstances of the parties require that a division of property be ordered. It may be the case that the Court finds that a division of property is in fact not needed in certain circumstances.

Once the Court establishes that a property division is required, the Court then identifies and values the assets of the relationship, knows as the "net asset pool".

Once the net asset pool is determined, the Court looks at the financial and non-financial contributions of the parties to the net asset pool. These contributions are considered from 3 points of the relationship – the beginning, throughout, and for a period of time after the end of the relationship. This also includes looking at debts incurred and contributions made to the welfare of the family.

The division is then decided on the contributions made, taking into account the other relevant factors of point 4. These factors include things such as the length of the relationship, the age of the parties, what their earning capacity is like and whether there are children in the care of the parties.

Ultimately, the Court does not start from a 50/50 position and it is not the case that women automatically get more. It is all a balancing act of contributions and needs.

Should you find yourself in a position where you are unsure of your rights please do not hesitate to contact one of our friendly staff on 02) 9682 3777.