After you have separated there is usually a need to separate your property and finances. You may jointly own a house, have bank accounts, cars in joint names or superannuation – these need to be dealt with so that they are separated and the financial ties between you both are cut.
Family Law is discretionary – i.e. it is up to that Judge on the day with the facts that they have to make a decision. This is also why solicitors will always give you a range and that range is often 5% or 10% in difference. We call that the range of were you might be able to settle your matter.
So, how is it all worked out? In 4 steps:
Step 1 What property is available
This includes everything that you both own – both together and individually – as well as anything you have an interest in. It includes things such as real estate, motor vehicles, boats, motorcycles, bank accounts, businesses, shares, mortgages, loans, tax debts, loans to third parties and superannuation just to name a few.
And it does not matter whether you will be splitting it i.e. people always say “but we agreed I wouldn’t touch it”. But it still needs to go into this first step – you both need to be able to make a fully informed decision.
Something to think about: watch out for valuing superannuation. If it is a defined benefit fund, then there is a specific way that it needs to be valued. Usually the statement value is not its true value.
Step 2 What and how have you each contribute
This stage looks at what you each bought into the relationship, and how you contributed during the relationship financially and non-financially, directly and indirectly, as well as contributions as a homemaker and or parent.
For example – if you are an electrician and you rewired the entire house. Then your labour is a direct non-financial contribution.
Something to think about: The Court considers the one earning the money just as important/significant as the person who stayed at home and looked after the children. One has not contributed more than the other.
Step 3 What are your ‘future needs’ or the ‘S75(2) factors’
This stage looks into the future and looks at such things as your ages, health, income earning disparity, care of children under the age of 18 and the duration of the relationship.
So, if one person is worse off than the other, then that person may get an adjustment in their favour to help them bounce back quicker.
Let’s take for example an analogy of super. If someone is earning $100,000 per annum they will be able to put away just under $10,000 per year in super. Now if the other person is only earning $30,000 per annum they will only be able to put away just under $3,000 per year in super. So, it may be that the person on the lower income may receive an adjustment (or a bit more out of the property settlement) because of that income earning disparity.
Step 4 Looking at the end result and considering is it legally fair
Note the word legally fair. Not morally fair. This step essentially looks over the other 3 steps and looks at the end result and converts the % into $ to see what the end result looks like. This is where we usually draw a line down the page, with your name on one side and your former partner’s name on the other side and start to divvy up the assets, liabilities and superannuation from Step 1 to see what the outcome converts to.