What You Need to Know about Property Settlements
What are the steps involved in an application for property settlement under the Family Law Act?
When you apply for a property settlement, the Court determines the application by way of a “4-step” process.
Step 1 – Identifying and valuing the assets, liabilities and financial resources of the parties.
This first step involves identifying and valuing the assets, liabilities and financial resources of the parties. This includes all assets, liabilities and financial resources, whenever and however acquired. In many cases this is a simple part of the process. However, in some cases, particularly those involving businesses, the valuation exercise can be quite complex and require the involvement of specialist experts.
Step 2 – Assessment of the contributions made by the parties.
The second step involves the assessment of the contributions made by the parties.
- Direct and indirect financial contributions to the property of the parties;
- Direct and indirect non-financial contributions to the property of the parties; and
- Contributions to the welfare of the family including contributions in the capacity of homemaker or parent.
Under what circumstances may the Court find that the contributions of the parties were other than equal?
In many cases, particularly where there has been a long marriage, the Court will form the view that the parties have contributed equally.
The Court may find that the contributions of the parties were other than equal, particularly in the following instances:
- Where the marriage or de facto relationship is short and there are no children, in which case the Court will be principally concerned about the direct financial contributions made by each of the parties;
- Where only one of the parties has entered the relationship with considerably more assets than the other party; where one of the parties has made a substantial contribution by way of an inheritance, gift from family or personal injury settlement;
- Where one of the parties has brought to the marriage or de facto relationship special skills or has made outstanding efforts which have resulted in the accumulation of substantial wealth; or
- Where the deliberate or reckless conduct of one of the parties has resulted in a loss to the parties. Step 3 – Assessing the future needs of each of the parties.
Step 3 involves assessing the future needs of each of the parties. The Court must consider such things as:
- The age and state of health of each of the parties;
- The income, property and financial resources of each of the parties and their capacity for employment;
- Who has the care of any child of the marriage or de facto relationship under the age of 18 years;
- Commitments necessary to enable a party to support himself or herself or any other person that the party has a duty to maintain;
- The eligibility of either party for a pensioner superannuation; the standard of living that is reasonable in the circumstances;
- The extent to which the earning capacity of a party has been affected by the marriage or de facto relationship; and
- If either party is living with somebody else, the financial circumstances of their household. When the Court considers these factors, it will then decide whether their ought to be an adjustment in favour of one or other of the parties to compensate for any difference in the future circumstances of the parties.
Step 4 – Is the proposed division of property fair to both parties? After assessing steps 1-3 detailed above, the Court must then decide whether the proposed division of assets is fair to each of the parties. This assessment is done by holistically examining the circumstances of each case.
If you are looking for a lawyer in Sydney to do your property settlement, or for further information in relation to a property settlement, please do not hesitate in contacting any member of our Family Law Team.