How To Split Assets In A Divorce

How To Split Assets In A Divorce

How To Split Assets In A Divorce

Find out more about assets in a divorce, what they are, how they are divided, and the process to follow to formalise your divorce.

Dealing with a divorce can be a very emotionally stressful time. Separating your marital finances is an essential first step to help you move forward. The way your property is shared should be fair, and it is different for everyone. A lot depends on their circumstances.

When splitting your assets, it is crucial to understand your entitlements. Let’s take a closer look.

How To Divide Assets

There are several things to consider when dividing property after a relationship breakdown. The division of assets must be fair and equitable. A court will consider contributions to the relationship, current and past incomes, future needs of each party, health and age. Each case is assessed individually as the requirements vary depending on the individual circumstances. It is not always a straightforward 50:50 split.

You should consult with an experienced family lawyer to obtain independent legal advice. They have a solid understanding of the process and will help you negotiate the intricacies of the family law act. This can be particularly beneficial if your relationship with your former partner is not amicable.

Define Your Assets

Establishing a clear understanding of your marital assets and the financial pool is essential when preparing your property settlement. Your “property” includes all of your assets and liabilities/debts. When describing your financial situation, it is crucial to provide full and frank disclosure, ensuring that you are honest and open about your assets.

The asset pool can include:

  • The family home
  • Money
  • Shares and investments
  • Bank accounts
  • Jewellery
  • Cars
  • Businesses
  • Debts including credit cards, mortgage and personal loans

Once all assets have been established, they will need to be accurately valued to ensure that the property pool is accurate and the split can be fair and equitable.

In family law, superannuation is also considered an asset but is a different type of property as it cannot be accessed immediately. It is often overlooked in the property settlement, but it can add substantial value to the asset pool in many cases. There are specific superannuation splitting laws regarding the division of superannuation. Establishing an accurate value of the schemes is crucial when calculating the division. Obtaining legal advice from a family lawyer can help ensure that you split superannuation payments accurately.

What Is The Process For Dividing Your Assets In A Divorce?

When married or de facto couples divorce, they need to find a way to divide their assets evenly. In Australia, under the Family Law Act, couples in a de facto relationship have the same rights and entitlements concerning property division as a married couple if the relationship has been for more than two years. The application for settlement in family court must be made within 12 months or two years in a de facto relationship.

Once an accurate valuation has been finalised for the property pool, the first step when dividing the assets is to establish the financial contributions from each party. The law will look at what you have contributed to the relationship during your time together. Contributions to the relationship can include financial, non financial, parental and indirect contributions.

Financial Contribution

The contribution can be at the start of the relationship as an initial contribution or during the relationship. A financial contribution to a relationship can include; ownership of property, a regular salary or income, lump sums, pensions, superannuation.

Non Financial Contributions

A Non-financial contribution is a task or acts that can not have a price attached but add value, preserve or maintain the marital home. For example, services like building a fence, painting or landscaping can all be considered a non financial contribution. The completion of these tasks have saved money, time and increased the property’s value.

Homemakers and parental contributions such as care for the children, taking them to school, and extracurricular activities are considered by the Federal Circuit Court as essential as a financial contribution. One party managing the household allows the other to earn a full-time salary which can be used to reduce the mortgage.

Indirect Financial Contributions

An example of an indirect financial contribution could be using your money to cover household expenses, to allow the other party to use their finance to repay the mortgage on the family home, indirectly contributing to the acquisition of the property.

Direct Financial Contributions

A direct financial contribution is any payment that a party has made an acquisition, conservation or improvement to any property. It can include a monetary lump sum, mortgage repayment, even paying for repairs and maintenance to the property can be considered a direct contribution.

Future Requirements

When a family court decides to divide property and a financial settlement, they will consider the future needs of each party. Taking into consideration, the following factors will ensure that they can effectively determine an equitable property split:

  • Responsibility and care of the children
  • Mental capacity
  • Other health-related issues
  • Age
  • Financial resources
  • Capacity to earn
  • Ability to find employment

Formal Agreements

Once both parties have finalised the division of their assets, you should document the details into a formal agreement. Having a financial understanding that is legally binding is crucial to avoid returning to family court with a dispute or changes to the settlement.

Financial Agreements

A financial agreement documents the division of property that you have made with your former partner. The document does not have to be approved by the family court, but you should consult your lawyer for legal advice.

Consent Orders

A consent order is a formal document that outlines the agreement you have made regarding property settlement. It must be approved by the family law court and is legally binding.

What is Spousal Maintenance?

After your relationship ends, if one party cannot financially support themselves, the other party is required, under the Family Law Act, to help them meet daily living expenses. If a couple can not decide, the court can decide on their behalf. They will consider age, salary, capacity to work and parental responsibilities.

You will need to apply for spousal maintenance within 12 months from the finalisation of a divorce or within two years after the separation of a de facto relationship.

Summary

Establishing a clear understanding of your marital assets and the financial pool is essential when preparing your property settlement. The division of assets must be fair and equitable. A court will consider contributions to the relationship, current and past incomes, future needs of each party, health and age. Each case is assessed individually as the needs vary depending on the individual circumstances. It is not always a straightforward 50:50 split.

Once both parties have finalised the division of their assets, you should document the details into a formal agreement. The application for settlement in court must be made within 12 months or two years in a de facto relationship.

Prior to commencing court proceedings you should work together with a family lawyer to obtain legal advice and to understand exactly what are your entitlements.

FAQs

1. Are Assets Always Split 50:50 in a Divorce?

There are several factors to consider when dividing property after a relationship breaks down.

It is not always a 50:50 split, mainly if one party made more contributions to the relationship. The family law looks at contributions to the relationship; they can include financial, non financial, parental and indirect contributions. When splitting your assets, it is crucial to understand your entitlements working together with a family lawyer to obtain independent legal advice. They have a good understanding of the process and will help you negotiate the intricacies of the family law act.

2. What to Consider When Dividing Assets in a Divorce?

The division of assets must be fair and equitable. The court considers contributions to the relationship, current and past incomes, future needs of each party, health and age. Establishing a clear understanding of your marital assets and the financial pool is essential when preparing your property settlement. Financial matters are assessed individually as the needs vary depending on the circumstances.

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