Amidst the chaos of a divorce or separation, the task of dividing property may seem like an extra nightmare, especially if you and your spouse have accumulated a significant amount of property between the two of you.
This beast can be tamed, however. The first step is to understand a fairly regularised process and the second is to get some expert legal help. Yes, the property you own together will be divided between the two of you, and yes, there are ways that you can protect your interest in the assets that are most important to you.
First, let us first get rid of some bad information:
- Men in a relationship do not always fare worse than women;
- It’s not an automatic 50/50 split;
- It does not matter if the property is in one name only;
- De facto couples who separate also have property division rights; and
- Informal agreements are not enforceable. If you shouted “Take the house,” on your way out the door, it doesn’t mean a thing.
Two routes and four steps
There are two ways to divide the property. The first, which the majority of Australians follow, is through a private agreement, which may be approved by the court via a consent order, or as a binding financial agreement for which both parties must have the advice of independent counsel.
The second alternative is to ask the Family Law Court to determine how property should be divided. This involves four steps:
- Identification of the assets, liabilities and superannuation interests that form the marital property pool. As a word to the wise, this will include far more than most people realise. The assets must then be valued by an independent appraiser. (Woe be to the party who tries to hide assets or undervalue them! There are significant penalties for that.) After the value of the marital property pool is determined, the adjustments begin. These involve:
- Assessment of the contributions of each of the parties throughout the relationship to the net property pool and to the welfare of the family. These need not be financial contributions. Home maintenance and child-rearing count as contributions.
- Weighing the current and future financial circumstances of each party, considering age, state of health, child care responsibilities, whether one party has a more substantial earning capacity than the other, the length of the relationship and its effect on each of the parties earning capacities.
- Finally, the court will assess whether the division achieved through the previous steps is appropriate or ‘just and equitable’ given the totality of circumstances.
These steps, even though they technically apply only to the Family Court process, will also form part of the background thinking about the fairness of any private agreement, whether achieved by consent order or through a binding financial agreement.
How to protect what’s important to you
Once the value of the marital property has been determined and adjustments made, the negotiations about a particular property can begin.
Is protecting your interest in your business the most important issue to you? What about not having to move the kids out of the home they have always lived in? Would a trade or time limits solve the problem?
Remember though, that what you agree to will be very, very difficult to change as the years pass and various needs change. Remember too, that negotiations about property division are usually conducted separately from conversations about child care responsibilities and their financial support.
This is a complicated situation and you will need an experienced negotiator on your side. Divorce and separation are difficult enough. There is no reason to add to the misery with inadequate legal guidance.
If you are contemplating divorce and have questions about how the property you hold with your spouse may complicate matters, please call the attorneys at Owen Hodge Lawyers to schedule a consultation. Our phone number is 1800 770 780, and we look forward to speaking with you.