Who gets what in a divorce or separation
In Australia after a divorce or separation, you are entitled to get:
- 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, from emotional, physical and financial abuse (see for eg domestic violence applications).
What is in this article
- Fair separation or divorce settlement flow chart
- How much am I entitled to get 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 get in a divorce or separation?
- What is a fair property settlement after separation?
- What is included in the total separation property pool that I am entitled to get?
- 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 get 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 can get. You are 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 binding financial agreement made under the family law act.
A 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 (to allow for this the agreement wording should be precise). 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 essential 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 (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 decide 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?
The date final documents are filed with the court, not as at the date of separation is when the court calculates the property pool.
What about property that has been disposed of after divorce or separation?
If a party sells a property after separation, it gets added back into the pool. 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 any 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 made post-separation (i.e. what each party has paid for since the date of separation, mortgage repayments, credit card repayments and school fees).
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 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 calculate a fair settlement
- Make a list of assets and liabilities
- Assess the initial contributions of each party
- Consider the length of the relationship
- Determine whether or not any assets or liabilities should go together or in separate pools
- Deduct the liabilities from the assets to get the total property pool
- Assess the post-relationship and post-separation contributions of each party
- Asses the future needs of each party
- Based on the above you should be able to get a rough %
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 spreadsheet available here, once you have the property pool (the total of the assets minus the liabilities) multiply that by the percentage share you expect and that will calculate how much you expect to get in a property settlement.