A “property settlement” is the general term used for the financial settlement that occurs after a couple has separated. In layman’s terms, it means “who gets what and why. In legal speak, any settlement reached must be “just and equitable”.
In determining the parties’ assets to be distributed, the term “property” does not just mean real estate. It includes all assets such as shares, investments and bank accounts. It also includes the value of any business and also the value of interests in any companies and trusts. The parties’ superannuation is also included.
In determining a percentage division, a court will look backwards to assess each party’s contributions to the asset pool. It will also look forwards to assess each party’s respective needs. Each of these assessments is an exercise in its own right.
Once a percentage division is reached, how each of the parties is to receive that percentage entitlement is considered. For example, if one party wants to retain the family home, numbers are crunched to determine what payment that party should receive, taking into account what other assets and superannuation each party is retaining.
A financial settlement can be reached by agreement between the parties or ordered by a court, if no agreement can be reached. If the agreement is reached by consent, it is very important to ensure that the agreement is formalised, either by way of Consent Orders through the Federal Circuit and Family Court of Australia (FCFCA) or by way of a Financial Agreement.