Family De Facto - Property Settlement Process

How does a Court Decide on Property Orders?

If you reach agreement with your former partner regarding property settlement, there are two ways of formalising that agreement:

  • Consent Orders through the court; and
  • Making a Financial Agreement which is binding under the Family Law Act.

However, if an agreement cannot be reached, Courts will decide on property/financial orders in family law cases. 

Legal advice should be taken as to which of those options is more appropriate for your circumstances.

One size does not fit all.

Expert Advice from our Accredited Legal Specialists

Property Settlement Process

How does a Court Decide on Property/Financial Orders, whether there be a marriage or defacto relationship?
The assessment of an appropriate property settlement is a four-step process.

Step 1: Ascertaining The Net Asset Pool

The general rule is that all assets must be taken into account, whether they are acquired before or during the marriage or after the separation.

The definition of “property” is very wide. It includes almost everything of value.

“Property” includes assets of either or both the parties, such as real estate, shares, cars, jewellery, savings, furniture and effects.

Superannuation is treated differently and, depending on the type and value of fund, it may be divided (split) at the time that a property order is made.

The Court must also consider the financial resources of the parties. These can be funds or assets over which a party has influence or control or (in certain circumstances) prospective entitlements.

Ascertaining the net assets of the parties, valuation issues frequently arise. Taxation (including capital gains tax), stamp duties and other issues also arise.

It is important for parties to have appropriate legal advice to ensure that all those issues are taken into account.

Step 2: Contributions to the Net Asset Pool

The next step is to assess each party’s contribution to the marriage, both financial and non-financial, and also assess the contribution made as homemaker or parent.

Initial contributions (such as what you bring into a marriage) can be relevant as are gifts and inheritances and other “out of the ordinary” moneys received during the marriage.

Step 3: Future Needs

The next step is to assess the future needs of both parties, taking into account a range of things, including:

  • Age
  • Health
  • Income earning capacity
  • Whether the party has the care or support of children
  • The financial circumstances of any new relationship.

Where appropriate, an adjustment to the “contributions based” (step 2) result can be made as a result of the consideration of those factors.

Step 4: Practical Effect

The final step is to consider the practical effect of any proposed settlement, to achieve a result which is just and equitable (fair and reasonable) in all the circumstances.

For example, the court now has the power to split superannuation entitlements between separating spouses.  The fourth step of the process will sometimes include a consideration of the appropriate blend of any settlement between immediately available assets, and deferred but important benefits such as superannuation.

If you reach agreement with your former partner regarding property settlement, there are two ways of formalising that agreement:

  • Consent Orders through the court; and
  • Making a Financial Agreement which is binding under the Family Law Act.

You should take legal advice as to which of those options is more appropriate for your circumstances.

In any property settlement, both parties have a clear obligation to make full and frank disclosure about their respective financial circumstances.  A failure to make proper disclosure of a relevant matter can have very serious consequences.

Spousal Maintenance

In certain circumstances, separating couples can have an obligation to provide ongoing maintenance for their former partner. In broad terms, you can be liable to pay ongoing support for your former spouse if:

  • Your former spouse is unable to adequately support himself or herself so that their reasonable needs are met; and
  • You have the capacity to do so.

Issues surrounding spousal maintenance can be complicated, and will often need to be considered as part of an overall settlement of financial matters.  You should seek legal advice from an accredited in relation to those issues.

Expert Advice from our Legal Specialists

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