If you are going through a separation or divorce, it is important to have an understanding of how the assets and liabilities of the relationship are divided between the parties. At Brennan Tipple Partners, we like to use a four step process:
Four Step Process
- Identifying the property, assets, financial resources and liabilities that make up the asset pool.
- Identifying how the asset pool should be divided between the parties based on the contributions each has made to the relationship or marriage.
- Identifying whether any further adjustment should be made in favour of one party due to their future needs and ability to earn income.
- Identifying whether the proposed orders will be just an equitable in all of the parties’ circumstances.
Section 79(4) of the Family Law Act 1975 relates to the way that the asset pool of a marriage or de facto relationship (see section 90SM(4) for a de facto relationship) is divided between the parties, based on their contributions. These contributions can include:
- The financial contributions the parties made at the beginning of the relationship.
- The financial contributions the parties made during the relationship.
- The contributions by the parties as homemaker or parent.
- The non-financial contributions, such as renovating the matrimonial home.
Section 75(2) of the Family Law Act relates to the way that the asset pool is adjusted based on the future needs or ability to earn income of each party. It considers a number of factors which can alter the effect of the property settlement if it were based only on the contributions of the parties.
Along with factors such as the contributions of the parties. whether there are children, and who has care of those children, Section 75(2) involves other relevant considerations of each party, including:
- The age and health of each party.
- The income and ability to earn income of each party.
- Whether a party is caring for a child or children under the age of 18.
- Any commitments each party has in relation to supporting themselves or a dependant.
- Eligibility for a pension, allowance or benefit.
- Where the parties have separated or divorced, a reasonable standard of living.
- The extent to which payment of maintenance could increase the earning capacity of a party by enabling further education.
- The effect of any proposed order on the ability of a creditor of a party to recover a creditor’s debt.
- The extent to which one party has contributed to the income, earning capacity, property and financial resources of the other party.
- The length of the marriage and how it affected the earning capacity of the party seeking maintenance.
- The need to protect a party who wishes to continue their role as a parent.
- The financial circumstances of any current cohabitation by either party.
- Any orders made under section 79 of the Family Law Act.
- Any child support that one of the parties is liable for.
- Any fact or circumstance which the court feels needs to be taken into account for reasons of justice.
- The terms of any financial agreement binding on the parties to the marriage.
- The terms of a Binding Financial Agreement that either party has entered into.
In short, the way in which the Court determines how the asset pool of a marriage or relationship can be complicated and the different matters which need to be taken into account is quite extensive.
At Brennan Tipple Partners, we pride ourselves on providing quality legal advice that is tailored to the client. If you are feeling unsure as to ‘who should get what’, we encourage you to give us a call on (02) 4323 1900 and come in for an obligation free consultation with one of our experienced Family Law Solicitors.