After separation, one of the things that must be considered is how the assets and liabilities of the relationship – the property – is going to be divided.
What is ‘the Property Pool’
Identifying the ‘Property Pool’ of the parties is the first step in moving toward finalising the financial relationship after you have separated.
This means accounting for all of the assets – these might include: – the matrimonial home – superannuation – investment properties – an interest in a business or trust – shareholdings – bank accounts – perhaps valuable chattels or collectibles
And liabilities, including: – the home mortgage – investment loans – loans from family members – credit card liabilities – car finance – debts to the ATO.
Collating your financial documents for the past 2 – 3 years in relation to your assets and liabilities, is a process which must be completed prior to finalising a property settlement.
Parties have a ‘duty of disclosure’ to each other, which means financial documents must be exchanged in order for both parties to understand the property pool which exists between them.
Determining a ‘fair and equitable’ settlement
There are a number of factors which help to determine what a fair and equitable division of property would look like, between separated partners. The Family Law Act (Cth) 1975, lays down the principles in this regard. Please call us to find out what your entitlements may be.
Factors taken into account include each party’s contributions to the relationship at the commencement of the relationship – in other words, what each party ‘brought in’. For long relationships, this factor is not as important.
Also taken into account will be the contributions of both parties during the relationship – both financially (for example, income earned) and non-financially (for example, taking care of children, performing home duties). In many instances, contributions during a relationship are considered ‘equal’.
Perhaps the most relevant factor in determining a fair and equitable settlement is a consideration of the respective ‘future needs’ of each of the parties. This consideration involves comparing such factors as the relative ages and health of each of the parties, whether one party will have primary care of any children, the relative income-earning capacities, what resources are available to each party by way of financial/income or property that will provide assistance to that party into the future, what standard of living should be promoted for each of the parties, what contributions each of the party’s have made to the resources of the other.
Most property settlements can be negotiated by agreement between parties. These agreements will sometimes be reached by the parties informally and without the assistance of legal representatives, and other times they will involve a period of correspondence and disclosure between representatives before a final agreement is determined.
Any agreement, even one which is reached privately between the parties, should be formalised to protect the parties from later claims. This is extremely important. Our family lawyers are experienced in preparing the formal documentation required to finalise your agreement.
Agreements should always be ‘formalised’ in order to protect parties from future claims or debts that may arise in the future. Such agreements can be quite complex, especially where there are family businesses or trusts, debts and self-managed superannuation. Without formalised agreements, parties can be subject to further claims in later years, by their ex-partner or by third parties.
We will recommend the most appropriate form of settlement document required for formalising settlement. Most frequently, parties enter into ‘minutes of consent order’, where their agreement is formalised in court orders. For such court orders, no physical appearances at court are required and the process is done by submitting relevant paperwork to the court.
Alternatively, ‘binding financial agreements’ can be prepared, if such agreements are recommended in the circumstances. Please call us to discuss your particular situation.
You will have many questions. You will also, likely have heard many conflicting stories about separation and property which have confused you. Early advice can be invaluable in helping to protect assets and minimise liabilities.
Note – the information provided above is general-in-nature, and in an area of law which can be very complex. Each person’s individual circumstances will be different. You should always seek legal advice before acting.
Please call our office on (03) 9379 0877 to book a no-cost 30-minute consultation. We are here to answer your questions – in plain English – and give you guidance on ‘where to next’.