What the Court considers in a property settlement
Before making any property settlement orders (including Consent Orders) after a separation or divorce, the Court must consider that the proposed Orders are 'just and equitable.'
In determining property entitlements between separated or divorced couples, the Court will undertake the following steps:
- Identification and valuation of assets
- Valuation of assets
- Division of assets according to contribution and future needs (s.79(4) and s.75(2) of the Family Law Act set out factors that the Court may consider).
Summary of matters considered by the Court in property settlements (s 79)
Generally, the factors (relating to point 3 above) considered by the Court are:
- Financial contributions - such contributions may be direct/indirect in nature towards the children of the marriage and property acquired during marriage
- Non-financial contributions – eg. housework, child care
- Future needs of both parties - eg state of health, earning capacity of each party (see s 75 factors)
It is important to note that the Court will assess the pool of assets as a whole and NOT on an asset by asset basis.
Common misconceptions about property settlements
The following are common misconceptions in relation to property settlements:
- that property will be divided equally regardless of individual circumstances
- the owner of an asset will have exclusive rights over the asset
- the first person leaving the matrimonial home will be penalised financially
- the division of property is based on whose "fault" it was that the marriage broke up
- the parent living with the children has the right to live in the home until the children of the marriage are 1 8 years old.
All these ideas are wrong and are NOT used by courts in determining how the assets are to be divided.
Matters taken into account - alteration of property interests - s 79
Section 79 of the Family Law Act sets out what the Court takes into account when making orders regarding property settlements for married couples:
1. Financial contributions
2. Non-financial contributions made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage:
- to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them,
- includes contributions on the last-mentioned property which is no longer the property of the parties to the marriage or either of them
- contributions made by a party to the marriage to the welfare of the family constituted by the parties to the marriage and any children of the marriage, including any contribution made in the capacity of homemaker or parent
3. Effect of any proposed order on:
- the earning capacity of either party to the marriage
- a party to the marriage or a child of the marriage.
4. Any child support under the that a party to the marriage has provided, is to provide, or might be liable to provide in the future.
Right of spouse to maintenance (s 72)
A party to a marriage is liable to maintain the other party, to the extent that the first-mentioned party is reasonably able to do so, if, and only if, that other party is unable to support herself or himself adequately whether:
(a) by reason of having the care and control of a child of the marriage who has not attained the age of 18 years;
(b) by reason of age or physical or mental incapacity for appropriate gainful employment; or
(c) for any other adequate reason;
having regard to any relevant matter referred to in subsection 75(2).
Matters Taken into account by the Court in relation to spousal maintenance - s 75
This section deals with matters the Court shall consider in relation to spousal maintenance. However, the matters above relating to property settlement will be considered by the Court. The Court will consider the following:
1. Age and state of health;
2. Income, property and financial resources and the physical and mental capacity of each of them for appropriate gainful employment;
3. Which party has care of a child of the marriage under the age of 18 years;
4. Commitments necessary to enable each party to support:
- himself or herself; and
- a child or another person that the party has a duty to maintain
5. Responsibilities to support any other person;
6. Eligibility for a pension, allowance or benefit under:
- any law of the Commonwealth, of a State or Territory or of another country; or
- any superannuation fund or scheme within or outside Australia and _
- the rate of such pension, allowance or benefit paid to either party;
7. A standard of living that in all the circumstances is reasonable;
8. Extent to which payment of maintenance would increase the earning capacity of that party by enabling them to undertake a course of education or training or to establish himself or herself in a business or otherwise to obtain an adequate income;
9. The extent to which the party whose maintenance is under consideration has contributed to the income, earning capacity, property and financial resources of the other party;
10. Duration of the marriage and the extent to which it has affected the earning capacity of the party whose maintenance is under consideration;
11. The need to protect a party who wishes to continue that party’s role as parent if either party is cohabiting with another person-the financial circumstances relating to the cohabitation;
12. Terms of any order made or proposed to be made about property settlement under s.79;
13. Any child support that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage; and
14. Any other circumstances which the court deems necessary to consider.
For de facto couples, different parts of the Family Law Act apply to property and maintenance orders.