A common family law question is, how are assets divided or split in a divorce in Australia? Perhaps the main thing to realise is that the divorce itself does not divide your assets and money automatically. You can go to court to get your divorce order, but all you are getting is the legal dissolution of the marriage. You still need to attend to the issues of property (and parenting).
The Legal Mechanics of Property Settlement
There are basically two ways this can be done:
By consent: you and your former spouse or de facto partner can agree on how your property should be divided without any court involvement, and if you agree on arrangements, you can seek to formalise your agreement by applying for consent orders in the Family Court, or you can enter into a Binding Financial Agreement;
By Court decision: if you cannot reach an agreement, you can apply to a court for financial orders, including orders relating to the division of property and payment of spouse or de facto partner maintenance.
If you were married, applications for property adjustment must be made within 12 months of your divorce becoming final.
If you were in a de facto relationship, your applications for property adjustment must be made within 2 years of the breakdown of your de facto relationship.
If you do not apply within these time limits, you will need special permission of a court. This is not always granted.
So How Are The Assets Divided?
The short answer is, there is no short answer. There is no formula used to divide your property. It’s not an automatic 50/50. No one can tell you exactly what orders a judicial officer will make. The decision is made after all the evidence is heard and the judicial officer decides what is just and equitable based on the unique facts of your case.
The Court will:
Identify and value the existing assets and liabilities of the parties.
Since all parties have an obligation to provide full and frank disclosure to one another, there is usually an exchange of financial documents early on (called disclosure), which allows each party to understand the net asset pool.
Consider the contributions of the parties.
Contributions can be direct (e.g. made by one of the parties’ to the relationship) or indirect (e.g. made by one of the parties family members), financial (e.g. earning an income) or non-financial (e.g. renovations or improvements to a property done by one of the parties) or made as homemaker or parent. Each party’s contribution is assessed as a percentage or a range of percentages.
Consider the financial commitments and resources of the parties.
For example by looking at the age and state of health of each party, who will have the primary care of the children moving forward, whether one party has a more substantial earning capacity than the other, the length of the relationship and its effect on each of the parties earning capacities, etc. Adjustments to the percentage arrived at previously can then be made again.
Determine whether the proposed orders are just and equitable.
Lastly, the court will look at the big picture to make sure the percentage or division achieved by the application of the above steps is appropriate or ‘just and equitable’ in all of the circumstances of the case.
Property settlement and the division of assets after a divorce can be complicated, there are indeed many complex issues including superannuation, pre-marital assets, taxation, spousal maintenance, investment properties, to name a few. Given the amounts usually involved, people tend to instruct lawyers to assist them with this aspect of divorce and separation.