The 50% Property Settlement Myth

In this video, Accredited Family Law Specialist and Page Provan Director Stephen Page debunks the 50-50 property settlement myth in family law.

Transcript

G’day, I’m Stephen Page from Page Provan Family and Fertility Lawyers. And I want to talk to you about the myth of the 50-50 property settlement. 

It really is a myth. How many times have I heard at a barbecue, “Ah, you’re a divorce lawyer.” And then I put my head in my hands and they all know what’s coming. One of the reasons for a while there, I didn’t go out socially because someone would come to me and say, “Ohh, you know, I got ripped off” or “I’m going through a divorce” and all I want to do is enjoy a barbecue or a party. I don’t want to talk about work particularly. I don’t want to talk about work when when I’ve been consuming alcohol and it’s my spare time and I don’t have a duty of care to these people. Don’t I sound like a lawyer saying all that. 

But there is a myth about a 50-50 property settlement. And I think the myth was really, that balloon was popped way back in 1984. Now, 1984 was so long, I was still at law school.

But the myth was popped that long ago by the high court of of all courts, because back in 1984, there was a case and the case went like this. Husband and wife had been together for 20 years. And the judge said, well, you’ve been together 20 years. Therefore, it’s a 50-50 case split down the middle. Bang. There you go. And the high court said, “No, no, you can’t do it that way.” That’s not what the Family Law Act says. 

The Family Law Act, which is the legislation governing property settlements, has a scheme. And the scheme goes like this. And the high courts explained it to us further since. 

First, is it just an equitable or fair for there to be a property settlement? If the answer is no, then you don’t do it. If the answer is yes, then you engage in a holistic approach to do it. And that holistic approach looks at is  first, setting out the legal and equitable interests in property that each of the parties has. In other words, a balance sheet. The High Court didn’t use that jargon, but that’s the jargon we use. It’s a balance sheet. You set out what you are and what you are, what your super is, and work out what that what that property pool is.

Second, you then look at the contributions, financial and non-financial made to the conservation, acquisition and maintenance of property over the course of that relationship when when those properties have been together. 

Third, you look at the contributions to the family that have been made, and then you look at the non-financial, uh, future factors. These are called sometimes section 75(2) factors. They are those set out in section for married couples set in Section 75(2) of the Family Law Act. Basically, they look at what might happen in the future just because it might be fair, for example, to have a 50-50 split on the face of it. Well, he gets that. She gets that. 50-50. It might, in fact, be quite unfair because the research has shown what we know from reality.

In many cases, men often do better out of a split than do women. And that’s because he’s continued to go up and up and up in his job, and hopefully he’ll keep going up and up in his job, whereas she’s dropped out of the workforce to care for the children or working in part-time employment. So if you do a 50-50 split in that circumstance, lo and behold, she’ll actually be worse off. So often there is an adjustment made for these future factors, and that’s on top of the contributions. 

And then once you’ve done all of that, do a checking mechanism again to see that the whole deal is just and equitable or fair. So the thinking often is, well, we formed a relationship today, we got married today, or we start our de-facto relationship today, and we’ve been together two years. So after two years, it’s 50-50. No, no, no, no. 

You’ve got to look at what were the contributions. And while there’s weighting given to different factors, whether they’re non-financial factors or financial factors, often financial factors get a significant weighting, particularly for a short relationship.

If one of the parties came in with all of the property and I’ve seen cases like this, one of them has come in with 90% or 100% of the property. Is it fair after two years or five years that there’s a 50-50 division? And most people would say no, and that’s how the court looks at it. Sometimes a party says, “Oh, we’ve been together for two years or five years, 50-50! You know, aren’t I lucky?” You know, I’ve won the lottery. No, you haven’t, actually, because you’ll actually get a lot less. 

So every case is different. I just can’t emphasise that enough. 

Get legal advice, proper legal advice about what your entitlement might be, but don’t assume that it’s going to be 50-50. And I’ll give you an example of a case that I had 20 odd years ago. 

These parties had $1,000,000 in assets. Now, that doesn’t sound much. Now, what’s the value of real estate. But that’s probably the equivalent of six, seven, eight, nine, $10 million now, with the way that the real estate market has rapidly growing. 

I acted for the wife. The parties had four children, three of whom were under the age of 18. The husband came in with everything. He had a lot of debt, but all the real estate they owned when they separated, he owned at the beginning. And so when they’d been together for 18 and a half years, what was she entitled to? We ran it at trial. At trial, the judge said, well, she’s made all these extra contributions in terms of care of the family. It’s been a long relationship, no question. It had been a long relationship. And because of the extra stuff she’s done, the extra need that she’s got under those future factors, she gets 62.5% and he got the balance. The husband wasn’t very happy about that, understandably, and he appealed. What did the full court of the Family Court tell us? Her entitlement was 50% on contributions. She was entitled to 40%. Didn’t matter that they’d had four children. But his initial contributions were so overwhelming that therefore they outweighed hers. And part of that balancing act, therefore 40% was what she was entitled to on contributions. He was entitled to 60% and she was entitled to an extra amount for future factors of 10%, which then brought up to that magical 50% figure. 

And so far the fact that he wasn’t paying child support, well that was a matter for the Child Support Agency. So that client, that wife ended up with 50%, but it was through that process. That can be an outcome of 50%. Just don’t assume it. Assume every case is different. Get advice about what is fair.

Thank you for watching. I’m Stephen Page from Page Provan Fertility and Family Lawyers.