Who Gets What in a Divorce or Separation

Date: Jun 02, 2009
Document Type: Newsletter

With well over a third of relationships failing, there will be very few Australians who do not know someone who has been through a separation, most of which will involve a sorting out of finances and property. Unfortunately for lawyers, that often means that someone who has separated will have been given advice by a friend, relative or workmate about what they should get.

Family lawyers are used to hearing people say things like "We split everything down the middle, don't we?", and "Mothers with kids get 70%, I've heard." Our Family Law system does not use fixed formulas or percentages - everyone's case and circumstances are that bit different - but there is a long-established way of working out the appropriate solution, which the courts have laid down, and lawyers use to give advice.

This involves a four step process, and Step 1 requires a family balance sheet of assets and liabilities. This is prepared regardless of in whose name a particular asset may be, because assets may be in one party's name for any number of reasons. A separate listing is prepared for superannuation, which is treated as a different class of property. The Family Law system requires a full disclosure of a party's financial position, and valuations or appraisals of the worth of various types of properties are usually obtained and exchanged as part of the process.

Step 2 involves an assessment of contributions by or on behalf of a party. These contributions will usually be both financial and non-financial, and so contributions as a parent and homemaker are given a real value. If one looks at a typical Australian family where Dad is the major breadwinner and Mum the major parent and homemaker, in many cases those contributions will be seen as equal. If one party or another has made or received special contributions an adjustment will be made, and typical examples of this are where a party brought a lot more financially into the relationship than the other, where one has been given gifts from parents or has received an inheritance. Step 2 is about the past, and will produce an assessment of the respective contributions as at the time of the assessment.

Step 3 is about the future, and requires a consideration of whether adjustments need to be made to the Step 2 outcome, based on future needs and responsibilities. The most common Step 3 factors are the ongoing care of children, and age, health and earning capacity of the party, matters often related. How much allowance is made for parenting responsibilities will depend on the number and age of the children, any special needs and the involvement of the other parent. There are other factors, but those are the common ones.

Once a Step 2 assessment has been made, any adjustments needed for the future by Step 3 are made, and a percentage reached. Step 4 then requires an overall look to see if that outcome is fair and reasonable, but Step 4 adjustments are not that common.

As you can see, a lot of value judgments have to be made, and disagreement is quite likely! Resolving disagreements uses many hours of court time, so getting expert advice at the start is sensible, rather than relying on gossip.

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