FINANCIAL SETTLEMENTS – HOW ARE ENTITLEMENTS ASSESSED

Date: Jun 11, 2011
Document Type: Article

In common misconception in relation to financial settlements is the parties are entitled to an equal share of the parties assets, or that an equal division is a starting point. This is not correct.

A party’s entitlement in a financial settlement, whether it is a marriage or de facto relationship, is assessed using the same methodology in each case. In addition, the entitlements are assessed on a case by case basis.

A 4-step methodology is used to assess each party’s entitlement. The first step involves working out exactly what assets and liabilities the parties have, and what the assets are worth on a net basis.

Each party will have an entitlement to a percentage of the net assets. In establishing this percentage, step 2 requires an assessment of the contributions of each party. The contributions will be financial and non financial.

At step 3 an assessment is made as to whether either party will be entitled to an additional percentage of the net assets for a reason, and if so what that addition of percentage should be.

At step 4 the percentages assessed at steps 2 and 3 are added to determine what proportion of the overall net assets each party is entitled to receive. This is where the number-crunching exercise occurs. The value of the entitlement of each party on a percentage basis is worked out, and then a determination is made as to how to divide and allocate the net assets in the percentage or dollar proportion each party is entitled to receive.

Contact our Managing Partner, Dominic Wilson on (02) 8268 4000 or by email at craddock@craddock.com.au for friendly professional service.  Dominic will refer you to an Accredited Specialist Family Lawyer.

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