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Property settlement during a divorce

Property Settlement Legal Services

During most relationships, assets and incomes are jointly pooled together to try and achieve financial security for the benefit of the family. Upon separation, joint finances need to be untangled and divided to cause an outcome which is “just and equitable” or in other words “fair”.

The Family Court of WA has the power to alter the property interests of separated married couples and separated de facto couples. This can be achieved through an agreement or after contested proceedings if there is no agreement.

If you and your former partner cannot reach an agreement about how to divide your property fairly between yourselves, a Magistrate of Judge at the Family Court of WA will decide for you both after a final hearing. You will have an opportunity to present your case. Your former partner will also have an opportunity to present their case. But ultimately neither of you will have any control over the outcome. Although you can reach an agreement between yourselves any time up until reasons for decision are delivered and final property orders are made.

Agreements can be reached outside of the court system through informal negotiations, mediation, or arbitration. Agreements are then either formalised through a Form 11 Application for Consent Orders or Binding Financial Agreement.

If an agreement is not reached through negotiation or there is an important issue which needs urgent attention, it may be necessary to file an application at the Family Court of WA.

If you and your former partner are both legally represented, you will be expected to attempt mediation together before commencing proceedings at the Family Court of WA.

There are several commonly accepted steps involved to determine the just and equitable alteration of matrimonial property interests under the Family Law Act 1975 (Cth) or de facto property interests under the Family Court Act 1997 (WA).

First and foremost, the Court cannot make orders for the alteration of property interests unless it is satisfied that, in all the circumstances, it is just and equitable to make the order. Sometimes it is appropriate to just leave the interests in property without any alteration. Other times, an alteration of any interests in property might cause unfair outcomes or unintended consequences. However, it will usually be just and equitable to make a property settlement order if there is not and will not be the ongoing common usage of matrimonial property by a separated husband and wife.

Second, it is necessary to identify the composition and value of the property pool which is available for division between the separated couple. This means establishing the existing legal and equitable interests of the separated couple in their assets, liabilities, and financial resources (including superannuation). This is done through the disclosure process. All parties involved in the dispute must give full and frank financial disclosure of their financial circumstances until the case is resolved. All assets, liabilities, and financial resources are identified and valued. If values are not agreed, then proposals and valuations are arranged from suitably qualified professionals.

Third, once the net property pool has been identified there is an assessment of the past contributions made by each of the separated parties from the time of cohabitation until present. Contributions are characterised as follows:

  1. Direct financial contributions to the acquisition, conservation or improvement of any of the property, such as wage and salary earnings.
  2. Indirect financial contributions to the acquisition, conservation or improvement of any of the property, such as gifts and inheritance from families
  3. Direct and indirect non-financial contributions to the acquisition, conservation or improvement of any of the property
  4. Contributions to the welfare of the family, including any contribution made in the capacity as parent and homemaker

Fourth, there is an assessment of the adjustment factors which take into account the future needs of the parties. A range of specific factors are assessed to establish whether an adjustment to the assessment of contributions is needed and warranted in favour of one party. The most commonly considered adjustment factors are things such as age, health, the care arrangements of children, the income earning capacities of the parties, and the financial resources available to the parties. There is a tendency to assess the assessment of future needs in percentage terms without considering its real impact in money terms, which is ultimately the critical issue.

Finally, there is a consideration of the effect of all of those findings and a determination of what order is just and equitable in all the circumstances of the case. The wording “just and equitable” is commonly defined as “fair”. This is the point which usually raises much disagreement because it is acceptable for everyone to have different ideas about what represents a fair outcome.

The wholistic outcome of the step-by-step process is to decide how the existing assets and liabilities are fairly divided between the separated couple.

The shorthand summary of the process can be described as “what do you have, what is it worth, and who gets to keep what”.

After determining the just and equitable alteration of property interests, the Court may also assess and make maintenance orders or child support departure orders in appropriate circumstances. However, the Court, as far as practicable, is obliged to make orders which will finalise the financial relationship between the separated parties.

The outcome of each case depends on its own unique facts and circumstances. For example, in rare circumstances it is fair for one party to receive most to all of the available assets. On some occasions a fair outcome is achieved by one party receiving over 100% of the available assets from a modest sized net property pool while the other party keeps an ongoing substantial, reliable, income-earning capacity.

There are often myths associated with property division orders. One common myth is that all assets must be divided equally between separated spouses. Another common myth is that a de facto partner is automatically entitled to their partner’s home or assets if they live together for 6 months. Those situations may potentially apply overseas or elsewhere, but not in Australia.

It is important that you obtain independent legal advice about your personal circumstances and options.

If you have any questions about the property division process, please feel welcome to contact one of our family lawyers by emailing us at admin@kdkfamilylaw.com.au or calling 08 6141 3227.

Please feel welcome to contact Michael Klimek to discuss any of our services we offer

You may require further detail.

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