DO ALL SEPARATING COUPLES SPLIT THEIR PROPERTY 50/50?
One of the most common myths around separation is that property is split 50/50, no questions asked. There is no rule or requirement for a 50/50 division of property after separation. Each case is decided based on the unique facts of each family and their circumstances.
We can break down how to work out a property settlement under the Family Law Act into 5 steps.
1. Should we get involved?
We must determine whether it just and equitable to divide the assets between the parties. This isn’t as easy as it might sound. Sometimes, just being married or being in a defacto relationship does not mean you automatically become entitled to a share of your partner’s assets.
2. What have you got?
Next, we look at what assets, liabilities and superannuation interests the parties have in their own names or in joint names. Values for these items can be agreed between these parties or determined through disclosure of financial documents and independent valuations. There can sometimes be disputes about whether certain assets or liabilities should be included or excluded from the property pool. At the end of this step, we can determine the net position of the property pool.
3. What did you do?
This step involves assessing the parties’ contributions such as direct and indirect financial contributions, non-financial contributions, homemaking and parenting contributions. A percentage is assigned at the end of this step to balance each party’s contributions.
4. What do you need?
Looking into the future, we look at various matters for both parties such as age, income earning capacity, who has primary care of the children, health issues and financial resources. The percentage at step 3 can be adjusted in light of the ‘future needs’ factors to determine the division of the property pool between the parties.
5. Did we get it right?
The last step considers whether the property division and its practical effect are just and equitable in all the circumstances of the case. This is intended as a check to make sure that each party got a fair deal that balances their access to cash assets, property and superannuation.
Remember that every property settlement will involve different considerations based on the unique circumstances of the relationship and complexities of the property pool. 50/50 is not always the answer and you may be entitled to more than 50% of the property pool.
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