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Steps To Divide Property

Parties to a de facto relationship may ask the following questions after they separate:

  • Who will keep the house or does it need to be sold?
  • How will money in the bank accounts be divided?
  • Will one party need to pay out the other?
  • What do the parties do if they own a business together?
  • Does it matter if the parties own properties in Victoria, another Australian State or overseas?

The answers to the above questions are dealt with in what is generally called a property settlement. What a party receives in a property settlement is not worked out by an exact formula and depends on the circumstances of the relationship. The overriding factor that needs to be considered is if the division of the parties’ property is “just and equitable”.

A number of steps are followed to work out how the property of the parties are divided:

1. Can the parties ask the court to make an order for property settlement?

There are strict requirements that must be satisfied before a party to a de facto relationship can ask the court to make an order for property settlement after separation.

2. What property is to be divided?

This step involves working out the assets, debts and superannuation of the parties. This includes:

  • The home;
  • Investment properties;
  • Cars;
  • Investments like share portfolios;
  • Funds in bank accounts;
  • Businesses operated by one or both of the parties;
  • Superannuation entitlements of the parties;
  • Mortgages; and
  • Personal loans

Working out what the parties have to divide can be 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 assets are to be divided taking into account the value of each asset.

3. How did the parties acquire their assets?

After it is worked out what the parties have to divide, the next step is to work out how the assets were acquired. This includes assessing:

  • What each party owned when they started living together;
  • How the parties bought property when they were together;
  • How the parties paid for expenses of the relationship;
  • Who was responsible for caring for the home and the family;
  • Whether either party received any gifts or inheritances;
  • How long the parties were together.

Each party’s contribution is then usually expressed as a percentage. It is important to note that there is NOT an automatic assessment that property be divided equally (50% each) just because the parties were in de facto relationship.

4. Are there any other factors to take into 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 relationship who are under the age of 18;
  • The income of each party;
  • The age and health of each party.

These factors may change the percentage on how the assets are to be divided.

For example:

If one party’s yearly income is $160,000 and the other party’s yearly income is $35,000 then this difference in incomes will most likely result in an adjustment of 10% in favour of the party that has the lesser income. Therefore, if the assessment of how the property has been acquired is 55%/45% in favour of the higher-income- earning party then the adjustment for other factors will change the percentage division to 55%/45% in favour of the lower-income-earning party.

5. 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.

Property settlements arising from de facto parties separating are complex, particularly when there may be issues of if the parties were actually in a de facto relationship. This is why it is important for any person who has separated from their de facto partner to obtain advice from a qualified family lawyer who has experience with de facto relationship property settlements

For 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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