Mastering Family Law Property Settlements

Property settlement is the process by which a separating couple divides their assets and liabilities. In Australia, this is governed by the Family Law Act 1975, which applies to both married couples and de facto couples (including same-sex couples). Understanding how the process works is the first step to achieving a fair outcome.

The Family Court applies a four-step process. The first step is to identify and value the asset pool - everything owned by either or both parties, including real estate, superannuation, businesses, vehicles, investments, and personal property, minus all liabilities. The net figure is the pool available for division.

The second step is to assess contributions. The court considers financial contributions (income, inheritances, gifts), non-financial contributions (homemaking, parenting, unpaid work in a business), and contributions to the welfare of the family. Contributions are assessed over the whole of the relationship, not just at the end.

The third step is to consider future needs. Factors include the age and health of each party, their earning capacity, whether either party has the care of children, and the financial resources available to each. A party who has been out of the workforce to care for children may receive an adjustment to reflect their reduced earning capacity.

The fourth step is the just and equitable check. Even if the first three steps point to a particular division, the court must be satisfied that the outcome is just and equitable in all the circumstances. This is a broad discretion that allows the court to take account of factors that don't fit neatly into the earlier steps.

Most property settlements are resolved by agreement rather than by a judge. Agreements can be formalised as Consent Orders (approved by the court) or as a Binding Financial Agreement (a private contract between the parties). Both have advantages and disadvantages, and the right approach depends on your circumstances.

If you cannot reach agreement, you may need to apply to the court for orders. Before doing so, you are generally required to attempt family dispute resolution (mediation). Litigation is expensive, time-consuming, and uncertain - but sometimes it is the only way to achieve a fair outcome, particularly where one party is hiding assets or being unreasonable.