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Dividing Property After Separation

When a person separates from their spouse they will often have a lot of questions. These may include:

  • Who will keep the house or do we have to sell it?
  • Will I have a car to drive and if so which one?
  • How will we divide the money in our joint bank accounts?
  • Will I need to pay any money to my spouse in order to keep the house?
  • What do we do about our business?
  • Does it matter if we own properties in two states?

The answers to the above questions are dealt with in what is generally called a property settlement. Your entitlement to a property settlement is not worked out by an exact formula and the outcome will depend on the circumstances of your marriage and what contributions each person has made. The overriding factor that needs to be considered is if the division of your and your spouse’s property is what is just and equitable.

What Is Just And Equitable?

The Family Law Act 1975 and cases provide guidance about how to determine what is a “just and equitable” division of property. Four steps are generally followed to determine entitlements.

1. What Property Is To Be Divided?

This step involves working out the value of what assets you and your spouse own and what liabilities you have. This may include:

  • the home;
  • investment properties;
  • cars;
  • investments such as shares;
  • funds in bank accounts;
  • businesses operated by you and/or your spouse;
  • superannuation;
  • mortgages;
  • personal loans.

Working out what you and your spouse have to divide can easily become complicated as there may be a company or trust structures or interests in businesses with other people.

It is very important to properly work out what property is to be divided between you and your spouse.

2. How Did You And Your Spouse Acquire What You Have?

After it is worked out what you and your spouse have to divide, the next step is to work out how did you and your spouse acquired it. This includes assessing:

  • what each of you owned when you first started living together;
  • how you and your spouse bought property when you were together;
  • who paid the mortgage and other expenses for the home and/or investment properties;
  • Who was responsible for caring for the home and the family?
  • whether either you or your spouse received any gifts or inheritances;
  • how long you and spouse were together.

Your and your spouse’s contributions are then usually expressed as a percentage, such as 60% to you and 40% to your spouse. It is important to note that there is not an automatic assessment that you and your spouse’s property are to be divided equally (50% each) just because you and your spouse were married.

3. Are There Any Other Factors To Take In Account

The next step is to see if there are any other factors that should be taken into account. These factors include:

  • who has the care of any children of the marriage under the age of 18;
  • the income of you and your spouse;
  • the health of you and your spouse;
  • the amount of child support paid by you or your spouse.

These factors may change how property is to be divided.

For example:

If you earn a yearly income of $150,000 and your spouse earns a yearly income of $40,000, then this disparity in incomes will most likely result in an adjustment in favour of your spouse of 10%. Therefore, if the assessment of how your and your spouse’s property has been acquired is 45%/55% in favour of you, then the adjustment for other factors will change the percentage division to 55%/45% in favour of your spouse.

4. Is The Proposed Division Just And Equitable?

The final step is to stand back and look at the proposed division of property to see if it is just and equitable. Usually, the proposed division will be just and equitable after steps 1, 2 and 3, but it is important to know that this is not always the case.

How you divide your and your spouse’s property can be extremely complex and you should obtain advice from a qualified family lawyer ensuring that you receive what you are entitled to following the breakdown of your marriage to your spouse.

If you require legal advice or representation in any legal matter, please contact Armstrong Legal.

Michelle Makela

This article was written by Michelle Makela

Michelle has over 15 years experience in the legal industry, working across commercial litigation, criminal law, family law and estate planning.  Michelle has been involved in all practice areas of the firm and in her personal practice has had experience in litigation at all levels (State and Federal Industrial Tribunals, the Supreme Court, Court of Appeal, the Federal Court, Federal...

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