Focus on property settlement: How does the Family Court split up property?
I am constantly amazed in talking to new clients who have come to me, dissatisfied with their existing lawyers, who tell me they were never told the 4 step process on property settlement. And here it is:
Step 1 Identify and Value the Property
It might sound obvious, but what is obvious is too often overlooked. If you are going to divide up property, the starting point has to be work out what you and your spouse have and how much it is worth.
It is essential that if you are going to your lawyer for the first appointment to create your own balance sheet. This will save your lawyer time, save you money and keep both of you focused.
This is dead easy:
List out all you and your spouse’s property.
Beside each item, in a column, set out how much you think it’s worth. Some clients don’t put anything because they want to be accurate.It’s better to put an estimate so at least there is a starting point. Valuations can be obtained later. If you want to be really sophisticated, you can set out who owns what, but this is not essential.
Total the property
List out all the debts in the same way.
Take away the total of the debts from the total of the property.
Then list out all the superannuation, in the same way.
Total the super.
Add the super to the difference between your property and debts and !voila! you have a balance sheet.
If there are disputes about values or issues about whether you know everything about what your spouse owns and how much it is, then you may have to get valuations and swap documents (this is called disclosure).
So far, so simple.
Step 2: Contributions
The Family Law Act then says the Family Court or the Federal Magistrates Court has to assess contributions. These are both financial and non-financial. It is not an accounting exercise, but weighing up competing factors. For example, how do you compare the care of children and housework with owning a house before the parties starting living together.
Although the court tells us every case is unique, thankfully from long experience many cases are fairly straightforward on this point.
Step 3: section 75(2) factors
Sorry to talk in jargon, but if you’re getting legal advice about property settlement it’s essential to know about this section of the Family Law Act. It says that in order to enable real justice to occur between the parties, the court can take into account certain future factors to adjust the outcome. Examples might be the care of children or a difference in what each of you earn.
You can look at section 75(2) here.
With traditional marriages where the husband has gone out to work and the wife has stayed at home to care for the kids and either quit work or works part time, there have been adjustments in favour of the wives.
Step 4: Fair result
The final step, which some judges have described as a checking mechanism, is to make sure that the result is fair, or to use the jargon ” just and equitable”.
And that’s it. If you have to go through property settlement, try and remain focused on this 1,2,3,4 as it will make the process more comprehensible, leave you more in control, and should result in settling earlier and spending less money on lawyers.