Property settlement, along with divorce and parenting arrangements, should be dealt with expediently following the irretrievable breakdown of relationships. The rules of property settlement are governed by the Family Law Act 1975 (Cth).
Basic principle: fairness for both
The Australian family law regimes is premised on the principle of fairness, and it is achieved by first recognising the importance of non-financial contributions by a party to the marriage/relationship, and secondly, allowing properties to be distributed to that party at the breakdown of their relationship even though s/he had only contributed to the marriage/relationship in non-financial ways.
The protection afforded by the Australian family law regime favours the home maker and is gender-neutral.
What properties are in the asset pool to be re-distributed to the parties?
Properties in the asset pool include all properties in the parties’ names at the time of the breakdown of the relationship, regardless of their locations i.e. the Australian family law regime covers the parties’ global assets.
Further, superannuation will also be subjected to re-distribution.
Proportion to be re-distributed: determined by contributions and future needs
It is not always the case that properties would be distributed 50:50.
Adjustments are made in accordance with the extent of the parties’ financial and non-financial contributions to the relationship/marriage.
In short relationships/marriages, the Courts may be less inclined to make significant adjustments than longer relationships/marriages, although properties acquired during the marriage/relationship may nevertheless be subject to equal distribution.
Future needs of the party will also play a significant role in the determination of an appropriate distribution. Illnesses, prospect of unemployment and children would also almost always affect how properties are to be distributed.
Faults/misdemeanour by the other party
Faults and misdemeanour by the other party, of themselves, are not valid ground(s) to influence the property re-distributions. However and in circumstances where such faults and misdemeanours have resulted in negative, quantifiable contributions to the relationship/marriage, it is then possible to do so.
Finality and severance to property re-distribution
The Australian family law regimes requires property settlements to provide finality and absolute severance to the parties’ financial ties following the breakdown of their relationship/marriage. This means that parties must not jointly own any more properties after the property settlement.
This creates interesting problems for many people. For example, the parties might have purchased a real property, the value of which at the time of the breakdown of their marriage could have dropped to below its purchase price. Strictly applied, the law necessitates the sale of the property notwithstanding the losses and financial burden it may impose on the parties; and the law cannot accommodate an arrangement that allows the parties to sell the property only when its values have increased.
If you encounter questions and difficulties in settling your financial issues, please contact us for our tailored advice and legal support.