Property Settlement

Macpherson Family Law are Specialist Family Lawyers and Divorce Lawyers with offices across Brisbane (Newstead, Milton and Murarrie) and also at North Lakes.

We set out below some general guidance as to the principles that apply under the Family Law Act for division of property when people separate:

When you and your partner split up, usually there are important property and financial issues that need to be sorted out. You need to work out what is to happen with your house, your cars, your business, your furniture and contents, and your superannuation.

What happens if you can agree on how to split things?

Where parties can reach agreement, it is still essential they formally document it under the Family Law Act. If the agreement is left on an informal basis, stamp duty exemptions and capital gains tax rollover relief on the transfer of property are not available. As well, each party remains exposed to a future claim by the other. In the absence of a formalised agreement, any party can apply to the Court for property adjustment orders any time from separation until 12 months after a divorce has been finalised (or two years after separation for de facto couples), regardless of any informal agreement. The Court also has the discretion in certain circumstances of hardship to allow parties to commence proceedings after this time.

What happens if you can’t agree on how to split things?

Where parties are unable to agree on a property settlement, upon application made by either party, the Court will step in and impose on the parties property adjustment orders that it considers appropriate. In doing so, the Court must not make any order unless it is satisfied that, in all the circumstances, it is just and equitable to make such an order. “Justice and Equity” is based on the Family Law Act and cases that have been decided over the last 40+ years. This may or may not however accord with an individual party’s own sense of justice.

Threshold Question Should any changes be made?

The High Court has determined that before embarking on any alteration of the interests of parties in property, that once the current assets, liabilities and financial resources of the parties have been clarified, the Court must ask itself whether it is just and equitable to proceed with alteration of those entitlements. In most cases the Court would easily be satisfied that it is just and equitable to proceed with alteration of the interests of the parties. There are however rare cases where the Court will form the view that it is not appropriate to do anything.

Once the decision is made to proceed with the alteration of the property interests of the parties, the Court adopts a four-step process:

Step One Identify and value the net property of the parties

‘Property’ in this context has a broad definition. It includes every possible interest that a person can have. For family law purposes, it is irrelevant in whose name property is held, or whether it is held jointly or individually. It is irrelevant when and how the property was acquired: property owned before the relationship is taken into account, as is any property inherited or received as a gift from a relative during the relationship, or acquired following separation. Companies and Trusts are usually included. Superannuation interests are also treated as property.

During this step, other than in special cases, all assets, liabilities and financial resources are ‘pooled’ and the current net value for the entire pool is ascertained.

Where there is dispute about the value of particular items in the pool, independent valuations may be required.

Step Two Consider the contributions of the parties

Each party’s contributions, financial and non-financial, direct and indirect, to the acquisition conservation and improvement of the property are then considered.

Each party’s contributions to the welfare of the family, including as a homemaker and parent, are also considered. A couple’s combined efforts earning an income and caring for home and family are often, but not always, considered to be equal – regardless of whether one party did more of one thing than the other.

The factors considered here are of a retrospective nature, in other words, the court looks backwards at the history of the relationship.

On the basis of the parties’ respective contributions to the property pool and to family welfare, the Court decides what percentage of the total pool should be allocated to each party. There is no presumption in Australian law that that a ‘50/50’ division is appropriate.

Step Three Adjustments for future needs

In this step, the Court looks forwards, and considers various factors of a future nature, which may justify an adjustment to the percentage division that was arrived at in Step Two.

The factors the Court looks at include the parties’ comparative ages and health, their respective incomes and earning capacities, whether a party has the care of a child or children, the duration of the marriage and its effect on a party’s earning capacity, and so on. (These are the same factors that a Court must consider when asked to make an order for spousal maintenance, and may be referred to as ‘maintenance factors’ or ‘future needs factors’).

The usual effect of this step is that a party’s ‘contributions based’ percentage entitlement (arrived at in Step Two) may be adjusted up or down, depending on the current and future needs of each party.

Step Four Implementation of the Orders in a Just and Equitable Way

Finally, the Court must consider whether the orders it proposes to make after completion of the previous steps are just and equitable. At this step, the Court may also consider the form of the order. For example, it may decide that one party should receive more of the current assets (such as the family home) and the other more of the superannuation assets, or a business, if that is most appropriate in the particular circumstances.

This step involves careful consideration of matters like tax and stamp duty. Often there is a need to take financial planning advice, as sometimes how the assets are split is just as important as the percentage received.

At our offices in Brisbane, and at North Lakes, as expert Family and Divorce Lawyers, we can tell you what you're entitled to, and what you should do.

 

Our Newstead office services all of North Brisbane, including Ascot, Clayfield, Hamilton, Eagle Junction, New Farm and Teneriffe.

Our Milton office services all the Western Suburbs areas, including Indooroopilly, Toowong, Kenmore, St. Lucia, Chelmer.

Our Murarrie office services all the Eastern Suburbs, including Carindale, Gumdale, Capalaba, Cleveland, Wynnum, Manly, Cannon Hill. 

Our North Lakes office services all surrounding areas, including Scarborough, Narangba, Redcliffe, Newport, Griffin, Murrumba Downs.