When you come to think about what is a just and equitable property settlement in your situation, you will probably quickly conclude that the law seems to provide you with very little guidance. Your research has led you to understand that your property settlement should be “just and equitable” but how do you translate this into an actionable percentage (%) or dollar ($) amount?
Is there any value in case studies?
It is natural that you are therefore interested in case studies, you want to find a situation that is similar to your own and by analogy imagine what your own outcome might be. The reason for this is that in general we are not used to conceptual or theoretical thinking, we prefer to think in a personal and practical way.
Lawyers on the other hand are trained in conceptual thinking, lawyers research the law and then apply it to the particular facts of your case. Your preference is to research someone else’s facts (i.e. a real case similar to your own) and draw out relevant conclusions for you. That’s fair enough and understandable, we all think in different ways and the legal way of thinking is not a natural way of thinking, it is a trained way of thinking arrived at over many years of laborious study and practice.
There is another way to gain information that is easy for us to understand and that is statistics. Statistics have one very clear advantage over case studies in that statistics provide us information about a large number of cases, while a case study provides us only information about that one case. The best case studies will provide information about a real case, so we are talking about reported judgments. The least useful case studies are those which are purely made up to “illustrate” a point; we need to be sure that the person who wrote a made-up case study applied the law accurately, and that the law has not changed since that time.
One thing that bugs me is family law blog articles that have a title like, “Who Gets What in a Property Settlement?” or “How Much Should I Get From My Divorce Property Settlement?” and then don’t actually tell you what you will get!!! All these articles do is tell you what the law is, not how much you are likely to get, not even a rough indication of what you are likely to get. Useful? Not really. Let’s see if we can do a bit better than that.
Divorce property settlement statistics in Australia
I have previously written an article about divorce property settlement statistics in Australia. It was based on a research study conducted by the Australian Institute of Family Studies, although it is getting a bit long in the tooth now (it is from 2001), but it is still useful. The study found that:
the average share to the wife is 55 per cent of the property and financial resources owned at separation;
42 per cent of the respondents reported that the wife received 60 per cent or more of the property and financial resources owned at separation;
the research found that the current discretionary system allows for substantial variation in settlement outcomes.
So straight away, you get an idea of what outcomes are delivered by the family law courts on average and you also now know that there is actually a fairly large range of possible outcomes. If you are the working husband in a traditional family structure, you are not likely going to get 50%, you are more likely going to get 45% to 40% or even less – according to the statistics; and if you are the wife you are likely to get more than 50%, 55% to 60% or even more.
Statistically likely proportion of divorce property settlement in Australia (based on 2001 data):
1. To husband: 40% to 45%
2. To wife: 55% to 60%
Divorce property settlement four step process applied by the courts
The courts follow a 4 step approach when deciding on a divorce property settlement.
PART A – Establish The Asset Pool
Both parties need to present a full balance sheet showing their assets, liabilities and net position. Everything must be disclosed.
PART B – What Contributions Were Made During The Relationship
Both parties need to detail their financial and/or non-financial contributions. Contributions anything that helped maintain the house, the family and the relationship. In general, the longer a marriage the more inclined the courts are to consider your contributions equal. Financial contributions can include wages, government payments, any gifts or inheritances received. Non-financial contributions include doing housework, looking after the children of the relationship and renovating the house.
It is important to note that:
“there is no principle or guideline (or indeed anything else emerging from s 79), that renders the direct contribution of income or capital more important – or “special” – when compared against indirect contributions and, in particular, contributions to the home or the welfare of the family” – Hoffman & Hoffman  FamCAFC 92
PART C – What Are the Future Needs Of The Parties
After deciding on the respective shares of property based on the above contributions, the courts then makes an adjustment. The adjustment takes into account factors including the future needs of each of the parties. The courts consider what each party is likely to need and what each is able to pay to support the other.
The courts look at a number of prospective factors, including future earning capacity, the health of each person, the ages of each person, employment prospects and financial resources, responsibility for the care of children post-separation and divorce, the duration of the marriage and the extent to which it has affected the future earning capacity of the parties. A person may have certain living requirements and need specific finances to maintain their health or standard of living.
PART D – Is the Decision Fair & Equitable?
Lastly, the court looks at whether or not their decision will be equitable and fair to both parties. The court will then decide on whether or not you keep certain assets or if they are to go to your previous partner.
Women with dependent children are usually at a disadvantage compared to men in terms of their financial circumstances and their income earning potential following marital dissolution. In particular, single mothers and older women living alone experience a drastic fall in living standards following a divorce. The court can be expected to assess a higher adjustment in their favour as they have a significantly lower earning capacity.
Common property settlement splits
Let us have a look at some divorce property settlement splits which people frequently ask about.
The “I just want $x” Split
Sometimes people arrive at a dollar figure and simply fixate on getting this amount regardless of all other factors. I remember one of the first divorce property settlement matters I ever worked on many years ago, my client (the wife) was divorcing her wealthy but allegedly philandering husband, and she instructed me to put forward an offer of settlement for $500,000 to be paid by him to her. She wanted to make this settlement offer in the context of a disclosed asset pool in the multiple millions of dollars. I advised her against it. I advised her both in conference face to face and in writing that she was entitled to more, that any settlement would be binding and final, and that if she changed her mind later down the track it would be too late. She insisted, she just wanted out, she wanted it all to be over and she needed the money now to invest in her new business she was opening. I suggested that she if was not willing to take my advice, would she be willing to hear from Counsel (an experienced barrister with a lot of gray hair and a big brain) as to the effect of the property settlement and what her likely actual entitlement was. Well of course the advice Counsel gave her did not differ from my own, but still she would not be deterred. Before proceeding, I confirmed our advice to her in writing, let her “cool-off” for a few days, then I called her again, there was no change from her, “Go ahead and make the settlement offer.” As a dutiful solicitor bound to act on my client’s lawful instructions, I made the offer to the other side, who correctly wasted no time at all in accepting it. Settlement was effected promptly and my client got her $500,000 less my modest fees. What is the moral of the story? Well it should not surprise you that almost exactly one year later said client was back in my office telling me that the money was all spent and that she needed a second bite at the cherry. Unfortunately, the opportunities to re-open a property settlement are very limited, and her case unfortunately did not meet the criteria. Had she actually listened to my advise or to the advice of Counsel and been prepared to go through the process a little bit, she would have ended up much better off, but this is how it is, as lawyers we can only give advice, the decisions are made by the client.
This type of split does happen, in a number of circumstances.
A party that is in a hurry to get out of a relationship, wants to put it all behind them, and typically does not want to get legal assistance or advice, can due to their haste end up on the 30% end of this type of property split. Here is an example from an online forum in Australia in which a used from NSW posted, “I was stupid enough to settle with 31% of our property and 86% care of the kids. PLEASE Do not make the same mistake i did and take the easy way out. All i took was my car and a few household things (fridge and vac) I wanted it to be over but in hindsight i should have fought for 50% or more. I struggle now every week. ”
Secondly, there are large asset pools (in excess of $10 millions) in which courts might award a 70/30 split or something of that nature, that is 70% or more to the husband and 30% or less to the wife, but each case turns on its own factual circumstances and a court is not to be fettered in its exercise of judicial discretion. There is no obligation on a trial judge to consider comparable cases (Anson & Meek  FamCAFC 257).
Thirdly, there may be adjustments made due to unequal contributions and/or the future needs of the parties (e.g care of several young children being involved) which could lead a court to arrive at a split in this range. If one party made greater contributions, or if one party will bear the larger burden of childcare in the future, a split would be adjusted in their favour to the appropriate extent.
With a 60/40 split we move into the territory of the statistically more frequent property settlements, give or take 5% either way (i.e. 65/35, 60/40, 55/45). I would suggest that most scenarios will fall somewhere within this range.
Many people think that a 50/50 divorce property settlement split is fair and is the natural starting point, in reality however there is no automatic assumption that everything is split 50/50 when parties separate and an even 50/50 split is not the mean or the median outcome according to the statistics referred to previously.
A 50/50 split may of course be appropriate depending on the circumstances, an example is the Court of Appeal judgement in Fields & Smith  FamCAFC 57 which adjusted a 60/40 split to a 50/50 split on appeal in the case of a 30 year marriage in which the husband developed a highly successful business, while the wife’s contribution was mainly (though not only) to the welfare of the family.
Some examples of when a 50/50 split might be appropriate:
A long period of living together and each party is retired.
A short period of living together where all assets were acquired jointly during that time, each party earns a similar income and there are no children.
One party brought more assets into the marriage but the other party will have the primary care of the children after separation.
Divorce property settlement specific to you
At the end of the day, your specific and personal situation is unique to you. An experienced family lawyer is able to help you assess your situation, advise you where you stand in your property settlement, help you negotiate the settlement and finally document the settlement into binding court orders. Case studies and statistics are useful, but there is no real substitute for bespoke legal advice that takes into consideration:
Length of the marriage and de facto relationship;
Value of the current asset pool and the major assets that are in it;
Current incomes and/or earning capacities of the parties;
Ages and care arrangements for the children;
What assets the parties brought into the start of the relationship;
Other relevant factor.
Even if you are aiming on doing the property settlement by yourselves to save money, there is still a time you should get a lawyer involved:
To get an independent legal opinion on the proposed % split once you have agreed on and specified the asset pool (both parties should do this each); and
To draft the consent orders at the end to put your agreement into a legally binding form.
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