Separating or divorcing is such an emotional and confusing time so it’s good to know the basics about how assets like property and superannuation are handled during the process. Here’s some information from Cherie, one our local mums who specialises in this area.
Importantly, no two matters are the same, and as such the information below is general in nature and provided to give a general understanding of property settlement in a Family Law matter.
It’s important to remember that every matter is unique and the circumstances which led to the outcome for a ‘friend of a friend’ may be completely different to the relevant circumstances in your matter.
If you are currently going through a separation, or are considering separation, the place to start to ensure you are receiving appropriate legal advice to resolve your matter as quickly, amicably and cost-effectively as possible is with an Initial Consultation. We’ll include some more information on how this works at the end of this article.
How are property division matters handled and is superannuation included?
It’s no secret that the family law system is an imperfect one and parties can expect to incur costs in the vicinity of $50,000+ if their matter progresses to a final hearing in the court system – for which they will likely be waiting 12 – 18 months+ from the date the proceedings are initiated.
This is something we absolutely want to avoid where possible, and it may surprise you to know that only a very small percentage of matters actually ever end up in Court. When both parties are receiving appropriate legal advice from collaborative legal practitioners, the vast majority of matters resolve quickly and cost-effectively. Whilst some matters inevitably do end up in Court, there are many avenues available to avoid this.
The more cost-efficient and desirable outcome is to reach a negotiated agreement which may then be formalised and become ‘binding’ by way of consent orders or a financial agreement. The negotiations to reach this agreement can take many forms, including simple negotiations between parties (often via their lawyers), mediation and other forums.
A common misconception is that assets owned in one person’s name (such as an investment property or business) are not included in the property pool calculations for division between parties. In most cases, this is absolutely false – any asset, whether in an individual’s name or joint names is included in the asset pool. There can be exceptions where this may not be as black and white, but as a general rule, these assets are certainly taken into consideration when determining appropriate property division orders.
Similarly, the superannuation interests of the parties to a relationship are most certainly included in the joint matrimonial or joint de facto property pool. Superannuation is treated as property and it can be divided between parties by way of a Court Order (including a consent order) or financial agreement.
In all property settlement matters, there is essentially a ‘Four Step’ process to ensure a fair and equitable outcome, and this process is outlined below.
Determining a just and equitable division
The first issue to consider in any family law property matter is whether it is actually even appropriate to interfere with the current legal titles to the parties’ property. In most cases, it will be determined that it is appropriate to do so. We then move onto the following steps:-
- Identifying and valuing the property of the parties
Whether a matter is likely to settle by way of negotiation or is otherwise proceeding to a final hearing for determination, it is imperative to identify the current value of the assets, liabilities, financial resources and superannuation interests of the parties, whether those interests are in the sole names and/or the joint names of the parties.
This process is generally fairly straightforward, however it may become complicated if the parties are unable to reach agreement as to the value of certain items of property such as the family home, investment property or a business. In those circumstances, it may become necessary for the parties to jointly appoint experts to value the items of property which are in dispute.
- Assessing the contributions of the parties
This part of the process involves assessing the contributions made by each of the parties during the course of their relationship, including direct and indirect financial contributions, non-financial contributions and contributions to the welfare of the family, including in the capacity of homemaker and/or parent. These contributions are then assessed in three stages, being the initial stages of the relationship, during the course of the parties’ relationship and post-separation.
Importantly, where parties make the joint decision to have one party leave the workforce to take on the role of primary caregiver and homemaker for the family while the other party remains in the workforce providing the income for the family – the parties’ respective financial and non-financial (parent/homemaker) contributions will be assessed as equal.
- Considering the future needs of the parties
After assessing the contributions of the parties, it is then important to consider any relevant future needs which may include, but are not limited to some of the following factors:-
- The age and state of health of each of the parties;
- The capacity of each party for gainful employment;
- Whether there is a disparity in the income earning capacity of the parties;
- Whether a party has the primary care of a child or children of the relationship and the age of the child or children;
- The protection of a party’s wish to continue the role of primary caregiver;
- Any child support commitments or receipts;
- The responsibility of each party to support any other person;
- The financial circumstances relating to a party’s cohabitation with another person;
- Whether the parties are in receipt of any government benefit, allowance or pension;
- The value of superannuation held by each party; and
- Any other fact or circumstance which may be relevant to the consideration of a just and equitable outcome.
- Just and equitable outcome
The final step of the process is that, having regard to the above 3 steps, consideration is then given as to whether the proposed division of property is just and equitable. If parties are looking to formalise their matrimonial or de facto property settlement by way of Consent Orders filed in the Federal Circuit and Family Court of Australia, it is noted that the Court will not make the proposed Orders unless satisfied that, in all the circumstances, it is just and equitable to do so.
What this will look like will be different for every matter because every matter is unique. In any event, this final step should serve to give you some level of comfort when navigating your property settlement – gone are the days where a party can be coerced into signing property division documents that provide for an unfair distribution of the property interests of the parties.
Where a matter is unable to be resolved through negotiation or mediation, it will likely proceed to Court. The Family Law Act 1975 (Cth) (‘FLA‘) enables the Court to make a property division order. However, as above, Court proceedings for property division are the last resort for most couples.
Similar to parenting matters, before a party can apply to the Court for property adjustment orders, the Court encourages the use of Dispute Resolution procedures (negotiation, mediation, etc). Again, there are some legislated exceptions to this requirement, such as circumstances of abuse, family violence or other urgency issues. However, the general idea is that parties will take genuine steps to resolve the issues in dispute before commencing proceedings in the Court, including the exchange of full and frank financial disclosure and the engagement in dispute resolution services such as negotiation, mediation, conciliation and/or arbitration.
We hope that the above information can shine some light on how a property settlement matter would normally progress, but again it’s important to remember that this is no substitute for legal advice tailored to your specific circumstances.
At Hills Family Law Centre we would have a no obligation Initial Consultation with you to discuss your matter. During our Initial Consultation with you, we take the time to understand your unique situation and provide you with preliminary advice in relation to your rights and obligations under the Family Law Act. We will discuss the various options available to you and provide you with an estimate of anticipated legal costs. You will then be in a position to digest that information and make a well informed decision about how best to move forward for yourself and your family. Our Initial Consultations are a flat fee of $275 inc GST, and are strictly confidential, with no obligation to proceed any further than that consultation. It is simply a ‘one off’ confidential meeting for you to better understand your legal position as it relates to your family circumstances.
Disclaimer: The information contained in this article is a general summary and is not intended to be, nor should it be, relied upon as a substitute for legal advice. You should consult a family lawyer to discuss any family law issues you may be experiencing.
