Debunking Misconceptions: Family Law Asset Division

“If we separate, I get half of their stuff.”

It never ceases to amaze us how often we hear this one. We suspect that it comes from that same friend who can tell you exactly what you need to do because they went through a separation that was exactly the same [insert eye roll emoji here].

The long and the short of it is that it is completely wrong. There is no 50/50 starting position and there isn’t even an automatic entitlement to an adjustment of property interests at all.

So, how does a court determine what division of assets is appropriate after a married or de facto couple separates?

The court will first ask whether it is just and equitable – that is, fair – to make an order that adjusts the existing legal and equitable property interests of the parties. In most cases, this threshold is easily met, particularly if there is no longer common use of jointly owned property.

But there is no guarantee. Recently, the Full Court in Chancellor & McCoy [2016] FamCAFC 256 decided that a couple who had kept their assets entirely separate should each keep what they have after a 27 year relationship. One party walked away with much greater assets than the other.

If the court does decide it is just and equitable to make orders, the court then undertakes a four-step process to determine the appropriate asset division. The process is as follows:

  1. first, all of the assets, liabilities, superannuation and financial resources of each party are identified and valued. This provides the pool of assets available for division;
  2. second, consideration is given to the contribution of each party to the assets. The court recognises financial, non-financial and contributions to the welfare of the family as homemaker and parent;
  3. third, adjustment can be made to account for additional factors that are relevant to the matter (often referred to as section 75(2) or section 90SF(3) factors). The factors that can be considered include the primary care of children, any disparity in age, health or earning capacity and whether a party has repartnered; and
  4. fourth, the court determines what orders, ultimately, should be made to achieve a just and equitable division of the assets in the circumstances of the case (which will be reflective of an overall percentage division).

The court has a wide discretion available to it when making these assessments, so there can be a range of reasonable and appropriate outcomes available in any given case.

No two cases are the same. It is important to get good advice about what your legitimate entitlements may be. But if the advice comes from someone without a practicing certificate who suggests that ‘you can get half their stuff’, you might want to look for some better advice.

The above is not intended as legal advice. You should obtain legal advice in relation to your own specific circumstances.



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