What am I entitled to in a divorce or separation Australia?
In Australia after a divorce or separation, you are entitled to:
- your ‘fair’ share of the property pool, the property pool might include:
- real property such as houses or units;
- bank accounts;
- stocks or shares;
- furniture; or
- any other assets.
- full and frank disclosure of what is in the property pool (see for eg duty of disclosure);
- other financial support if applicable such as:
- child support;
- spousal maintenance; and/or
- adult child maintenance.
- safety, peace and wellbeing, free from emotional, physical and financial abuse (see for eg domestic violence applications).
- How much am I entitled to in a divorce or separation?
- Will previous agreements be considered in the property settlement?
- What about specific terms of the binding financial agreement?
- What is the Australian family courts 5 Step approach when determining what you are entitled to in a divorce or separation?
- What is just and equitable?
- What is included in the total separation property pool that I am entitled to?
- What were the contributions of each family law party?
- Should there be any adjustments for future needs?
- Overall, is it practical + just and equitable to effect the proposed divorce or separation property settlement?
- How to work out what you are entitled to in a divorce settlement
- Property Settlement Calculator
- Separation and Divorce Property Settlement Examples
How much am I entitled to in a divorce or separation in Australia?
There is no cut and dry answer for how much of the property pool you’re entitled to. You are simply entitled to what is “fair” or what is “just” and “equitable”. To work out exactly what you’re entitled to and what is just, fair and equitable the family court adopts what is commonly known as the 5 step approach.
Will Binding Financial Agreements be considered a property settlement?
For an agreement to be considered in a property settlement it must be a valid Binding Financial Agreement made in accordance with the family law act.
A valid Binding Financial Agreement will overwrite the court’s authority on determining a property settlement.
What about specific terms of the binding financial agreement?
It is important to note that even in the cases where the Binding Financial Agreement is valid it is possible for specific terms of the agreement to be found void without ruling out the entire agreement (if the agreement is worded to allow for this). In Guild v Stasiuk, the Court considered whether a financial agreement was effective in excluding the Court’s jurisdiction to consider a claim for spousal maintenance.
The agreement included a clause that stated:
The wife) agrees that in the event of the event occurring (and relevantly, the event is the permanent separation), that she will make no claim for maintenance for herself and will accept the provisions of this Agreement in full and final settlement of any claim for maintenance that she might otherwise have had.
The agreement also expressly stated that it was a financial agreement under section 90B of the Family Law Act and in all other manners and form complied with the requirements of a financial agreement except for the clause about spousal maintenance. As section 90E (or section 90UH for de facto) states that clauses regarding spousal maintenance are void if they fail to specify how much or whom for spousal the maintenance is. The wife argued that with no inclusion of how much the spousal maintenance is then the provision was void and the court agreed. The court found that for a financial agreement to properly exclude the court’s jurisdiction to make an award of spousal maintenance it needs either an actual amount stated or the value of the portion of the property that might be considered spousal maintenance stated in the agreement. A mere promise to not make a claim is not enough to bar the court from assessing spousal maintenance.
The lesson here is that it is important to be aware of specific clauses not just the general validity requirements of binding financial agreements.
What is the Australian family courts 5 Step approach when determining what you are entitled to in a divorce or separation?
The Australian family court uses what is known as the 5 or 4 step approach when determining what you are entitled to in a family law property settlement. This approach is based on previous case law.
Step 1 – Is it just and equitable for a property settlement to take place?
In some circumstances, the Court may determine that it is not “just and equitable” for a property settlement to occur between the separating parties. The Court has the discretion to determine this and considers each case based on the facts and circumstances.
In circumstances where the Court determines that it is not just and equitable for a property settlement to occur, the property “lies where it falls”, and each party walks away from the relationship with the assets and liabilities currently in their sole name or possession.
Step 2 – What is the property pool?
“Property pool” means the assets and liabilities of the parties and includes assets and liabilities in sole and joint names. Examples of assets include real property (house/townhouse/unit, block of land, investment property), a business, motor vehicle/motorbike, caravan/camper trailer/boat, bank account, bitcoin, shares and superannuation. Examples of liabilities include loans (mortgage, personal loan, business loan), credit card, debt to Centrelink and debt to Australia Taxation Office.
What about property obtained after the date of separation or divorce?
Unless otherwise agreed between the parties, the property pool is usually determined as at the date the documents are filed with the Court, not as at the date of separation. This includes personal bank and superannuation accounts. However, if, for example, a large sum of money has been spent by a party without good reason, the amount may be added back into the property pool for division between the parties.
What about property that has been disposed of after divorce or separation?
If a party to the relationship purchases or sells anything post-separation and before a property settlement has been registered with or determined by the Court, in most circumstances, that asset will be included in the property pool for division between the parties. Therefore, it is best to determine a property settlement with your former partner/spouse as close to the time of separation as possible, and before either party purchases or disposes of property.
Step 3 – What were the contributions of each family law party?
Once the property pool is determined, the next step is to determine the financial and non-financial contributions of each party, specifically:
- Financial contributions that each party made to the acquisition, conservation and improvement of property including:
- Initial contributions (i.e. what each party
brought to the relationship); and
- Contributions during the relationship (i.e. earnings of the parties during the relationship, contributions of each party to mortgage repayments and living expenses); and
- Contributions post separation (i.e. what each party has paid for since the date of separation e.g. mortgage repayments, credit card repayments, school fees).
Financial contributions also include gifts of any type that one (1) or both of the parties have received from an external party (for example, a parent, grandparent or friend) during the relationship. Any inheritance received by a party is also included in this category.
- Non-financial contributions that each party made during the relationship and post separation. Non-financial contributions include parenting, homemaker (i.e. keeping the home in order, for example cleaning, washing, cooking, grocery shopping and home maintenance) and care of the other party or a child of the relationship during a time of serious illness or injury. It is important to note that the longer the length of the relationship, the more likely financial and non-financial contributions are considered by the Court to be equal.
Step 4 – Should there be any adjustments for future needs?
The next step is to assess the “future needs” of each party. Future needs include age, health, income earning capacity and care of a child / children. If any of these apply, the party which it applies to will more than likely receive a percentage adjustment for each future need. If the age, health, income earning capacity and care of a child / children is the same for each party, then adjustments for future needs may not be appropriate.
Step 5 – Overall, is it practical + just and equitable to effect the proposed property settlement?
Finally, the Court will consider the practical effect of the proposed property settlement, and whether it is just and equitable for a property settlement to occur.
A solicitor will be able to assist you in determining whether your proposed or agreed property settlement is practical.
In most cases, the Court finds that it is just and equitable for a property settlement to occur.
How to work out what you are entitled to in a divorce settlement
Get a list of assets and liabilities together
Get together a list of assets and liabilities, calculate the total of the assets and the total of the liabilities, once you have these put them into the property settlement calculator below.
What is an asset?
An asset could include real estate, cars, stocks or shares, cash accounts and anything that has value.
What is a liability?
A liability is any loans or debts that you must pay.
Calculate the property settlement
Using the calculator below or your own spreadsheet, once you have the property pool (the total of the assets minus the liabilities) simply multiply that by the percentage share you expect and that will calculate how much you expect to get in a property settlement.
Our Simple Property Settlement Calculator
Property Settlement Examples
A case in which almost all of this relatively young couple’s assets came from the husband’s very significant earnings (over $4.5 million) during the course of the 6 ½ year childless relationship
Altobelli FM (as he was then) dealt with a 6½ year childless relationship of two 34-year-olds. During the relatively short marriage, the couple had accumulated assets to the value at the trial of $1.7million, most significantly through the husband’s earnings during the relationship which totalled more than $4,675,000.00.
The wife sought to add-backs totalling over $43,000.00 to compensate for money spent by the husband on online pornography, prostitutes, mistresses and “sugar daddy organisations”. The expenses included travel and accommodation costs incurred prior to separation.
In response to the issue of add-backs, Senior Counsel for the husband argued that it was not in the public interest for courts to conduct this sort of detailed examination about the appropriateness of expenditure. He asked, rhetorically, whether such expenditure could extend to the purchase of Playboy magazines. Despite this argument, the court found that the expenditure was an asset and could be added back into the value of the pool.
When assessing the contributions of the parties in respect of the relevant asset pool, with a value of approximately $1.7m, the Federal Magistrate said:
“[The wife] supported the husband in his employment in various ways, both tangible and intangible, including moving with him between the UK and Australia. The Court does not accept……that this was to the detriment of the wife’s own employment….The wife contends that she did the majority of the household tasks and the majority of homemaking duties. The wife contends that she was responsible for maintaining the former matrimonial home. The Court accepts that the evidence justifies such a conclusion…..The biggest risk, in this case, is to under-value the wife’s contribution merely because it is difficult to quantify, and because of the discretionary nature of the assessment process. Section 79(2) and 79(4) require the Court to do justice and equity between the husband and the wife in the context of their relationship and life course, and are not primarily, by reference to needs, and certainly not by reference to the market value of the services rendered….In this case the Court assesses the wife’s contribution at 20%, noting that her contribution was both financial and non-financial, and having regard to the size of the pool……to award her more than 20% would result in a very significant downgrading of the vastly greater financial contribution made by the husband as a result of his very high earnings throughout the marriage”
The wife was then ordered a further 7.5% having regard to Section 75(2) factors, taking her overall entitlement to 27.5%.