There is a common misconception that getting a divorce means that a husband and wife will divide their property. This is incorrect.
A divorce is basically a declaration by a court that a marriage is over. Just because a couple gets divorced they haven’t necessarily agreed on how to divide their property or, if they have children, how much time their children will spend with each of them and when they will spend that time with them (e.g. weekdays and weekends).
The legislation that applies to married couples is the Family Law Act 1975 (Cth), which is federal legislation that applies across Australia. Legislation varies across Australia for de facto relationships, with different legislation applying in each Australian state and territory.
How can property be divided?
When people separate their property can be divided:
- by agreement, without documenting it and without going to court; or
- by agreement, by a Binding Financial Agreement or consent orders in court; or
- by going to court, either the Federal Magistrates Court or Family Court.
Property includes both assets (e.g. family home, cash, superannuation) and liabilities (mortgage, credit card debts).
This applies to both married couples and de facto couples.
How does the court decide?
It is not always possible for people to agree on how their property should be divided, so it is helpful to know how the court decides how property should be divided. Set out below is a list of the basic steps that a court will follow:
1. Property pool
Work out the assets and liabilities of the couple, both individually and together as a couple, and their value. This means that each party will need to locate documents in relation to their financial situation and records of their various assets and liabilities.
2. Financial contributions
Work out the financial contributions of each party during the relationship. Direct contributions are primarily from employment, indirect contributions could be from inheritances and gifts.
3. Non-financial contributions
Work out the non-financial contributions of each party during the relationship. These include homemaking (e.g. housework) and caring for children.
4. Future needs
A court will consider the future needs of each party. This includes a broad range of considerations, including who will be required to care for any children under 18 years of age; earning capacity, property and financial resources; age and health; physical and mental capacity; duration of the relationship; whether either party supports any other third parties; eligibility for government benefits; and whether either party is living with a third party.
5. Is it fair?
After considering the factors set out above the court will decide how the property should be divided. Before making a final decision the court will decide whether the proposed division of property is fair to both parties.
A court does not apply a strict formula in balancing all of these factors. Each case is different and the circumstances of each case will be considered by the court in determining how to divide the property of the parties. The court will exercise its discretion in determining how to divide the property.