Property settlement in four steps
Step One: What is the net asset pool of the parties?
This step involves the determination of all assets and liabilities jointly and separately held by both parties.
Step Two: What did the parties bring to the table?
The Court will take into account the assets and liabilities that each party held at the time of the commencement of the relationship and during the course of the relationship. The Court will also want to be informed about any non-financial contributions made. These include contributions of an unpaid nature such as domestic work in the household, the role of being the home maker and in some instances, the carer of other family members.
Step Three: What are the future party’s needs?
After determining the contribution percentage of both parties, the Court will ascertain the future needs that either party may have.
Examples of unequal proportions arise if one party is the primary carer of the children, where one person or the children have health issues that are ongoing and need to be paid for, where there is a likelihood of disparity in future income earnings or where there is a significant age gap.
After future needs are considered, an adjustment may be made to the contribution percentage in order to account for the needs of the parties. The adjusted percentage is applied to the net asset pool to finalise the splitting and division of assets.
Step Four: Is the result just and equitable?
The final step is to determine whether the outcome would be just and equitable. Sometimes it appears to be appropriate in dollar terms but the practical application of the analysis would not amount to a fair result. If it can be concluded that the result of the property settlement is just and equitable then the process can be finalised. Alternatively, if it is deemed not just and equitable it may require adjustment to the outcome in order to achieve a just and equitable result.
Further examples of when adjustments may be required include when a party holds a majority of their funds in superannuation or when a party is required to sell a business or part of their business. The process requires the parties creating a balance sheet setting out all assets and superannuation amounts held in funds and add backs that the parties may have received (e.g. pre-settlement distribution from controlled monies) less liabilities in order to determine the payment that is required to be made for an appropriate final result to be reached.
In circumstances where one party is to keep the matrimonial home, it may imply that the assets which are assigned to them at the conclusion of the property settlement are greater than the calculated and agreed entitlement. In such situations, a cash payment may be required to be made to readjust the result to the previously agreed outcome.
You must ensure that you disclose all of your assets and liabilities are disclosed. If this disclosure requirement is not met, you may be found to have contravened Chapter 13 disclosure requirements in the Family Law Act and you may also be found to be in contempt of the court.