Property and Spousal maintenance on Separation

Most couple relationships involve a degree of shared property. Upon separation, you and your partner will need to consider how to separate your property.

In ordinary circumstances, de facto couples will have 24 months from the date of separation to finalise their property matters. Married couples will have 12 months from the date of their divorce. If your circumstances fall outside of these time limitations, you should seek legal advice about whether there are any other options available to you.

Naturally, parties can find it difficult to decide how they should separate their property. What property should be shared? What is a fair share for all concerned? How do you implement any agreement?

If you cannot agree, parties to a de facto relationship or a marriage can apply to the Family Court to have the court decide the matter. The Court generally considers a matter in this way:

  1. First, what property can be considered (eg are trusts and companies included?);
  2. Second, is there any need to alter the parties’ legal interests in their property?
  3. Third, what contributions have the parties made to the property and the family during the relationship;
  4. Fourth, what are the parties’ respective future needs; and
  5. Finally, what would be a just and equitable division of property.

Asset Pool

A good place to start is by listing all of your assets and liabilities and trying to agree on a value. This includes any property or debt that has been acquired by either of the parties after separation or which was brought into the relationship. In most circumstances, the parties should consider that “everything is in the pot”.

You and your partner may not agree on the value of a particular item of property. An agreed value must be realistic and reflective of an asset’s current worth. In the event of a disagreement, parties can obtain a professional valuation undertaken by someone they both agree on.

Sometimes it is difficult to decide if something is property; valuations can also be difficult for some items. It may be wise to seek legal and/or financial advice if any of the following items exist in your asset pool:

  1. Shares;
  2. A company;
  3. A family trust;
  4. A business;
  5. A self-managed superannuation fund;
  6. Collectibles (eg. Art, wine, jewels, etc);
  7. Property overseas.

Parties should always be frank and honest with one another about the assets they have; a fair agreement requires that each party know the true state of affairs. It may be prudent to share current bank statements and tax returns to show the value of the funds you own and to disclose accurately your income. If you end up in court, any misrepresentation of assets or financial matters is a serious matter.

To help with listing your Asset Pool, you can download a copy of our Assets and Liabilities table here.

Is there a need to alter the parties’ property interests?

In some unusual cases, it may not be fair to make any adjustment of property. These are unusual cases where, for example, the couple separated, set up an informal arrangement, and then carried on relying on that arrangement. In such a case, a court may later find that in the circumstances it is no longer fair to alter the property arrangements.

Contributions

Once the asset pool has been ascertained, you will need to consider how the pool is to be divided. A Court will generally divide your assets on a percentage-basis; this is one way to think about division of property, but if you reach agreement based on other considerations that is fine too.

The Court will consider the contributions that each party has made in the relationship. Contributions include:

  1. Initial contributions: the value of property brought into the relationship by the parties. The court may then consider how those initial contributions relate to the property held at the time of trial. However, often the court will find that the value of initial contributions is offset by other later contributions, so that in long relationships initial contributions may not be given a lot of weight;
  1. Financial contributions during cohabitation to the time of trial: the value of direct and indirect financial contributions (such as income) that the parties made during the relationship and to the time of trial. This includes inheritances of property and receipt of large gifts;
  1. Non-Financial contributions: the direct and indirect efforts of either party in obtaining and maintaining a property (things like gardening, renovations and daily maintenance) during cohabitation to the time of trial. Indirect non-financial contributions also include things like caring for children so the other party can go out to work; and
  1. Domestic contributions: the efforts of either party in caring for a family and running a household. This includes raising children and performing household chores.

The court will assess the weight of the overall contributions by each party. Domestic violence and wasting of assets can also affect the adjustment of an asset pool. If you require specific information on your own circumstances, seek legal advice.

Future Needs

A court will then consider whether a division based on contributions should be adjusted because of the parties’ respective future needs. The court must consider the following in assessing whether some adjustment is required:

  • A party having majority care of a child or children of the relationship, or protecting their role as primary carer of a child;
  • A party having less of an earning potential than the other party, or needing to undertake education or training to improve their earning capacity;
  • A parties’ financial resources, including superannuation;
  • A party’s age;
  • A party’s health status;
  • A party’s responsibility to care for and support a dependant.

The Court may also take into account any other relevant circumstance that could affect a party’s income or lifestyle post-separation.

Traditionally, a significant adjustment to the division of assets may be made where one party is taking majority care of a child, has significantly less earning potential compared to the other party and/or where one party suffers a physical or mental illness that will affect their ability to earn an income.

If you require specific information on your own circumstances, seek legal advice.

A Just and Equitable Division

The final step for a court is to determine what a just and equitable division of property between the parties is. Once the parties, or the Court, have deciphered a division based on percentages, the asset pool can then be divided accordingly.

If you require specific information about your own circumstances, seek legal advice.

Spousal Maintenance

In addition to a division of assets, you may be entitled to spousal maintenance payments. A party to a marriage or de facto relationship may be ordered to maintain the other party if they are unable to support themselves because:

  • They have care and control of a child under the age of 18;
  • They are unable to get appropriate, gainful employment because of their age or physical or mental capacity; and/or
  • Despite having employment they are not able to meet their reasonable needs.

If you are considering asking your former partner to pay you spousal maintenance, the payment needs to be:

  • An amount that the other party can reasonably afford; and
  • At most, the amount you need to be able to reasonably support yourself and only for so long as you need them

If you remarry or commence a new de facto relationship, then you are no longer entitled to spousal maintenance. Spousal maintenance payments are not very common because often, after paying child support, a parent has no capacity to pay anything further to their former spouse. If you require information about a spousal maintenance payment, seek legal advice.

For information on how to finalise your financial matters, see our Commencing an Application and Finalising an Agreement tab above.

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