When a relationship ends, uncertainty can set in. You may wonder how you and your partner will divide your property and whether there is a “right way”. You may ask “What next? What am I entitled to? What is “fair”?
We always encourage our clients to stop, reflect and refocus at this time. Think about your goals, priorities and interests. Where do you want to be in 12 months’ time? What is important to you and why?
Sometimes it can be hard to know where to start and an awareness of how the law is generally applied when parties separate, can be helpful.
Under the law, the division of property at the end of a marriage or de facto relationship is usually determined through the following four step process:
Step 1 – Determining the property pool
This is done by listing all of the assets, liabilities and superannuation interests owned solely by you and your former spouse, and jointly with one another or any other person.
Our Property Calculator can be really helpful to record this information and it can be downloaded here.
Step 2 – Consider the contributions
Contributions to a relationship can be financial (i.e. income, running a business, money received from family or even a compensation payment. etc), non-financial (i.e. renovating the house) or carer/homemaker contributions (caring for children, cooking and cleaning).
When contemplating contributions, it’s very important that is not approached as a dollar-for-dollar accounting exercise. Also, it is equally important to be mindful that one type of contribution is not more valuable than another (i.e. financial contributions are not more valuable than carer contributions).
This also includes initial contributions to the relationship and post-separation contributions. You can read more about those here.
Step 3 – Determining Future Needs
The third step is to assess the future needs. This includes looking at a range of factors including:
- Age and health;
- Earning capacity;
- Any financial resources a party may have;
- Continued care for children under 18; and
- New partners and their financial circumstances.
Step 4 – Is it just and equitable?
After considering all the above it must be determined whether it is fair in all the circumstances for an adjustment to be made to the parties’ entitlement to property. What all this means is that the entire process is reality tested: Does it work? Will both parties be ok?
It’s really important to remember a few things before you get out the pen and paper:
- Your partner also has goals, priorities and needs. Consider your perspective and theirs too.
- You and your partner can come up with any outcome that suits you. It’s your family and you can create your own steps that work for you.
- Be aware that it can be very easy to become attached to an idea and sense of entitlement, such as keeping the house. Think about what happens if your partner also becomes attached to a certain outcome? You don’t want to end up opponents in conflict. Flexibility and being open to many possibilities us a great mindset to adopt from the get-go.
- You and your partner’s relationship isn’t over yet – it’s just changed. You still have a lot in common and sorting out your finances is one of them. Where possible, try and work together as a team to resolve property matters.
For more information about how the four steps apply to your circumstances give us a call here. Our lawyers can discuss your needs and goals with you and help you finalise your settlement agreements quickly and cost-effectively.
