Property Settlement
The process by which a court, if called upon to do so, shall determine a property or financial settlement is pursuant to relevant case law as well as the Family Law Act 1975 (Cth) and involves four steps:
1. The net asset pool
The court shall determine the assets and liabilities of the parties to determine the net asset pool. The court will include any assets and/or liabilities that either party brought into the relationship or marriage as well as any assets and/or liabilities that the parties, or either one of them, acquired, obtained or incurred during the course of the relationship or marriage. The net asset pool will include such assets whether they are held in the sole name of either party or jointly held in the name of both parties. It may include trusts, businesses, companies (or shares in companies) as well assets held in such structures.
2. The Parties’ respective contributions
The court shall then determine the contributions of each party to the acquisition, preservation, improvement or maintenance of the net asset pool, including financial (e.g. payment of a deposit for a property) and non-financial contributions (e.g. renovations) to the net asset pool. Contributions to the welfare of the family are also considered and assessed and may include contributions in the capacity of parent and/or homemaker. The court shall then “divide” the net asset pool such that each party shall, in effect, receive a percentage of the net asset pool.
3. Future needs
The court will assess whether any adjustment should be made to the contributions-based entitlements it has determined due to “future needs” factors. These factors are provided in section 75(2) of the Family Law Act 1975 (Cth) and, in effect, include considerations and factors such as the physical and mental health of a party or the parties, who has the care and control of any children of the relationship or marriage who are under the age of 18, any significant difference in the earning capacities of the parties, any significant difference in the income of the parties as well as any financial resources that may be available to the parties.
4. Just and equitable
The court shall determine whether the property settlement and not of orders it proposes to make are just and equitable having regard to, in particular, the net asset pool, contributions of the parties and future needs factors.
Upon completion of this four-step process, the court shall divide the net asset pool between the parties in such proportion as it considers, in the circumstances of the case, to be just and equitable.