Under Australian family law, experienced divorce lawyers will advise you that whenever a married couple divorce or a couple in a de facto relationship decide to separate, a property settlement has to be reached. Whilst the property in question will certainly include their home if they own it, it also includes many other assets too. These can include savings, stocks and shares, furniture, jewellery, vehicles and pretty much anything that the couple own that has value.
The journey from a couple separating and the property settlement being finalised usually has four distinct stages. Whilst it is possible for either or both of them to go through this process without a family lawyer unless they are fully conversant with property settlement processes, it would be wise to seek the advice of family lawyers at the very least. As for the property settlement process, here it is from step 1 through to step 4.
Step 1: Assessing The Property Values
The first step is probably the simplest one although it may require a reasonable amount of research to determine some specific values. In effect, the couple each list their assets and their liabilities. This is done on both an individual basis and for them as a couple, where they have a joint savings account, for example. Assets jointly owned with third parties should also be included such as joint ownership of a business.
Step 2: Determine Individual Contributions
This is a step that is often misunderstood as many people think this purely relates to how much in dollar amounts each person has contributed throughout the marriage or de facto relationship. It does not work like that, so again, if you are unsure then speak to a family lawyer who can advise you.
Whilst financial contributions do need to be assessed at this point, they do not take precedence over other types of contributions. The most obvious example would be the contribution of the mother caring for the couple’s children and the family home whilst her husband goes out to work.
Whilst her contribution as a mother may not have added a single dollar to the couple’s bank balance, it also follows that had she not made that contribution the father may not have been able to follow his career and thus earned the amount that he did.
Other contributions such as family gifts, helping to run running the family business, renovating their home, all count in this assessment.
Step 3: Future Needs Assessment
Ok, so we have assessed the ‘past’. now it is time to look ahead and determine what the future needs are of the couple. Factors that are a play in this include age, health, financial resources, earning capacity, and the care of their children. If one of the individuals has a new partner then their financial circumstances can also be considered.
Following this assessment and the calculations relating to finances, income, and outgoings, a property settlement can be drawn up by the couple or their respective family lawyers.
Step 4: ‘Just And Equitable’ Test
The last step is important as it makes sure that what has been agreed works and will also that the financial outcome ensures that the needs of both parties will be served. Getting to this point can require a considerable amount of compromise by both parties. However, provided both are committed to an amicable and fair divorce, in most cases the just and equitable test will be passed.