Dividing Property (Splitting Assets) and Divorce
When divorcing, the law requires couples to follow the following process to determine what each of them is entitled to when their assets are split.
Firstly, they must determine the assets available to be split. This is done by adding the current value of all assets, including superannuation, and deducting any liabilities. It is not relevant whether or not the assets or liabilities are held in one name or joint names. They all must be included. If there is a dispute as to the value of any items, an expert can be appointed to have those items valued.
Secondly, the contributions of each party need to be evaluated. It is recognised that people fulfil different roles in relationships, some taking on responsibility for being a primary income earner and the other being primarily responsible for being a homemaker or performing parenting duties. In broad terms the law generally values both of these roles equally. Therefore in long-term relationships contributions are often relatively equal unless someone came into the relationship with significantly more assets than the other or received a significant financial windfall during the relationship. After evaluating contributions, the result should be expressed in percentage terms. E.g. 55% to 45% if someone has contributed slightly more than the other during the relationship.
Thirdly, future needs are considered, particularly if those needs are unequal. Some examples of future needs being unequal would be were care of children is disproportionate, where someone has expensive health needs, where there is a significant income disparity or one person is significantly older than the other. There are many other types of future needs that may impact upon a property settlement. After examining future needs it may be appropriate to adjust the percentage reached from looking at contributions to allow for any disproportionate future needs.
Fourthly, after reaching a final percentage split of the assets and applying it to the net asset pool at the first step you can work out in dollar terms what each of you is likely to receive. The final step is to determine whether or not that result is just and equitable. To do this, the law looks at all of the factors and the practical outcome that will be achieved as a result of the property split. It then makes a value judgement to determine whether or not any further adjustment is necessary in order to achieve an appropriate result. Most cases do not require any further adjustment to achieve a just and equitable result after the percentages are calculated by looking at contributions and needs.
The final step to be undertaken is to determine who shall keep what assets and liabilities. In most cases each party will keep either what they own or what they have been using at the time of separation. If that position means that one person has more assets then they should, a cash adjustment is used in order to bring the final split of assets back into the correct proportions.
It should be said that you do not need to wait until your divorce is finalised to split or divide your assets. It can be done immediately following separation.
WHERE TO NEXT?
Taking the next step and contacting a family lawyer can be scary. Our lawyers will make you feel comfortable so you can talk about your situation. But first, ask yourself, Do I really need a lawyer?