Steps To Divide Property

When a relationship ends, one of the most important issues to resolve is how property will be divided.

Common questions include:

• Who will keep the home, or should it be sold?
• How will money in bank accounts be divided?
• Will one party need to pay the other a lump sum?
• What happens if the parties own a business together?
• Does it matter if assets are located interstate or overseas?

These issues are resolved through what is known as a property settlement.

There is no fixed formula for dividing property. Instead, the court follows a structured five-step approach to ensure the outcome is just and equitable in all the circumstances. 

Step 1: Eligibility

Before applying to the court for a property settlement, certain legal requirements must be met. For de facto couples, this may include proving the existence of a de facto relationship.

Obtaining legal advice early is important to confirm eligibility.

Step 2: Identify and Value the Property Pool

The next step is to identify all assets, liabilities, and superannuation interests of both parties.

This may include:

• the family home 
• investment properties 
• bank accounts and cash 
• shares and other investments 
• motor vehicles 
• business interests 
• superannuation 
• mortgages and personal debts 

This process can become complex, particularly where companies, trusts, or jointly owned business interests are involved.

Accurate valuation or agreed values of all assets is essential before moving forward.

Step 3: Contributions

The court then considers how each party contributed to the acquisition, conservation, and improvement of the property.

This includes:

• financial contributions (e.g. income, savings, property brought into the relationship) 
• non-financial contributions (e.g. renovations or unpaid work in a business) 
• contributions as homemaker or parent 
• gifts or inheritances received 
• the length of the relationship 

These contributions are typically assessed as a percentage split.

Importantly, there is no automatic 50/50 division, each case depends on its own facts.

Step 4: Future Needs

The court then considers whether adjustments should be made based on each party’s future circumstances.

Relevant factors include:

• care of children under 18 
• income and earning capacity 
• age and health 
• financial resources 

For example, if one party earns significantly less than the other, the court may adjust the division in their favour to reflect their greater financial need.

Step 5: Is the Outcome Just and Equitable?

Finally, the court reviews the proposed division as a whole to ensure it is fair.

This final step acts as a safeguard to confirm that the outcome is appropriate in all the circumstances of the case.

Property settlements arising from parties separating are complex, particularly when there may be issues of if the parties were actually in a de facto relationship. Every property settlement is different. The outcome depends on your individual circumstances and the proper application of legal principles.

For advice or representation in any legal matter, please contact Armstrong Legal.