Of course you are thinking about that question if you or a friend is facing divorce and worried about the task of dividing property and assets. But as we know, by the time a marriage is over, “fair” is often a fighting word. One person’s “fair” may be the other’s idea of wanton aggression. That is why the law uses different terms and slightly different metrics to get to an end that both parties can live with.
It may help to be a little cold and clinical about this issue. Property division has two basic phases. First, the soon-to-be-former spouses have to gather and agree on the value of what they own. This is often contentious because “marital assets” often includes far more than most people expect. The second phase, dividing assets so that neither person is unjustly enriched or impoverished, is often relatively painless.
Gather it in
Many attorneys describe the gathering phase as having five steps;
- First, parties must select a date to be used for the valuation of assets and liabilities. This is very often the date of separation, however parties may agree to a different date.
- Second is the job of marshaling all the assets. In general marital assets will include real estate, including the family home; cash in bank accounts, both separate and joint; superannuation for both parties; inheritances received during the relationship regardless of source; motor vehicles and household items. There are serious penalties for attempting to hide assets.
- Third, it is important to determine the value of the assets. Cash is easy but other assets are not. Some couples use market appraisals, sworn valuations or Red Book valuations for vehicles. Agreeing on an objective measure of financial value may be especially difficult when items have sentimental value. In any event, supporting documentation about valuation must be made available to the other party.
- Fourth, couples must assemble all marital debts. These may include mortgages, credit cards and tax liabilities; and
- Finally, total liabilities are subtracted from total assets to determine net assets.
This is what you have to find a way to divide.
Split it up
Many couples reach an agreement about the division of property and assets through mediation and thus never go to court, except to seek approval of the agreement. This is usually less expensive and may do less emotional damage in the long run.
If your case ends up in court because you cannot agree, remember that the goal is not necessarily a fifty-fifty division. The Family Law Act 1975 and the Family Court Act 1975 require the court to divide property between spouses (including de facto spouses) so that the outcome is fair and equitable. That may not mean half and half.
The court will look at the contributions of each person to the acquisition, maintenance and improvement of matrimonial assets (both direct financial contributions and non-financial contributions). It will also consider other contributions to the welfare of the family.
The court may also where appropriate take into account:
- the age and health of the parties;
- the income, property and financial resources of each of individual and their capacity for appropriate gainful employment;
- whether either party has care of a child of the marriage who is under 18;
- the responsibilities of either party to support any other person, such as an aged parent;
- the eligibility of either party for a pension or other government allowance;
- whether one of the parties has re-partnered and is cohabiting with another person (although fault for the break-up of the marriage is not considered); and
- any other fact or circumstances which the court feels should be taken into account.
Some assets may have to be liquidated in order to be divided, but couples can often work out trades so that particularly valuable but illiquid assets can be preserved intact.
The attorneys at Owen Hodge Lawyers would be happy to help you to come to an agreement about how to divide your property and assets during a divorce. Remember that one of the hallmarks of a good compromise is that neither party will be completely happy. You should, however, feel that the settlement is what you need to get on with the new phase of your life. Please call us at 1800 770 780 to schedule a consultation.