You may have heard the old wives’ tale that if you get divorced, both parties get half each in the property settlement.
You may be pleased (or otherwise) to know that things aren’t quite as simple as that and that there are many reasons why one of the parties can end up with more of the property than the other.
Step 1 – Divorce and property settlement: Working out the assets and liabilities
The first step in sorting out property between separated couples is to compile a list of all of the assets and liabilities of the relationship, and to give them a value which reflects the current market value of each item.
All of the assets and liabilities of the parties, whether they are in the sole name or joint names of the parties, and whether they have been acquired during the relationship or afterwards, must be included in the list. Sometimes, if property has been acquired after separation, it can be excluded from the list, but at the start of the property settlement process, it needs to be disclosed.
We can provide you with advice about how property acquired after separation should be dealt with if you find yourself dealing with this issue.
Step 2 – Divorce and property settlement: Considering contributions
The second step in the process is to consider what financial and non-financial contributions have been made to the relationship by each party and how those contributions affect the split of the assets between the parties.
For example, if the husband worked for an income during the marriage and the wife contributed to the relationship by working part-time and looking after most of the domestic duties and child rearing duties, this would be considered an equal contribution to the relationship by the husband and the wife, provided that there were no other extra contributions made by either of them.
Possible reasons to depart from an equal split of the assets and liabilities between the parties include:
- One of the parties had more assets at the start of the relationship
- One of the parties did work to improve and maintain real estate during the relationship
- The parties received the benefit of a lump sum payment from their parents
- One of the parties received an inheritance during the relationship
Step 3 – Divorce and property settlement: Considering whether an adjustment to the split should be made
There are many reasons why an adjustment might be made to the split of the assets and liabilities of the relationship between the parties based on their contributions.
Some of these reasons include:
- Whether one party has the responsibility to care for a child
- The difference in the current incomes of the parties
- The ability of each of the parties to earn an income in the future
- The age and state of health of each of the parties
- Any other financial resources that either party may have such as employee benefits
Step 4 – Divorce and property settlement: Just and equitable
The last step in a property settlement is to consider whether the proposed split of assets and liabilities is just and equitable in all of the circumstances.
What to do from here?
If you find yourself separated from your partner and wondering how to sort out your property, then call us today.
We can go through this process with you and give you advice about your property settlement and what you can expect in your particular circumstances.
And if you can do the following things before your first appointment with us, it will help keep your legal costs down.
Compile a list of each asset and each liability of the relationship and find out the approximate value of each item by doing the following things:
- For bank accounts, overdrafts and mortgages, you can find out online or by going into your bank and asking for a current balance
- For motor vehicles, you can find out by using online tools such as Redbook
- For real estate, you can get a real estate agent to inspect the property and give you a written estimated value
- For superannuation, you can ring your superannuation fund and obtain an updated balance
- For household contents, you can give us a rough estimate of what amount you would be able to obtain for the household contents at a garage sale.
Finally, collect any paperwork you can that provides evidence of the values that you have listed for each asset and liability.
Of course, we hope you never need to go through the process of a divorce and property settlement, but if you must, we’ll be here by your side.