The thought of divorce or separation is not without its battles, but deciding who gets what can be additionally complex and stressful.
Issues like co-parenting may be easier to discuss, and a simple mathematical formula would have eased the process of splitting assets, but since this is not a possibility right now, the need for lawyers and messy litigation is real.
Dividing assets in a divorce
The overarching principle in dividing assets under the Family Law Act is that the division of assets must be ‘just and equitable’. That sounds fair enough, but what does it mean?
Section 79(4) and 90SM of the Act sets out in broad terms the matters to be taken into account, in deciding a just and equitable splitting of financial assets. This means that each relationship is considered unique and there is no clear way of how that determination might be made.
Therefore you should not assume that your assets will be split equally, although this should be considered a starting point, particularly in long-term marriages/relationships.
This is because there is a lot to consider when it comes to dividing assets, including starting assets, current and past incomes, health, and age. As a direct result of all this, your case will always be dealt with on an individual basis.
How are assets defined?
As part of the divorce process, you will have to define, declare and value all your current assets. All parties involved must provide a full and frank disclosure of all assets. The final asset pool includes all assets, liabilities, and superannuation interests from both parties.
The process of dividing assets in a divorce
Once the asset pool is compiled and all parties agree that everything has been declared, the contribution that each party, financial and non-financial, is measured.
Non Financial contribution includes parental contributions (if applicable), contributions as a homemaker, parent or home renovator. It can also involve any indirect contributions, such as those made by a family member of either party.
Once this is done, future financial circumstances are taken into account. Here, a range of factors is considered, including the age and health of each party, which party will take primary care of any children (if applicable), earning capacities, and any impact the relationship had on them (such as a career break for child care) and the length of the relationship.
Once all of these factors have been considered, a percentage or range would be assessed.
A court will then decide whether this percentage or division is ‘just and equitable’ under the Family Law Act.
When assessing each of these factors, the length of the relationship will be significant in assessing contributions; the shorter the relationship, the higher the focus will be on financial contributions and vice versa.
One thing is for certain, there is no saying how a court may ultimately split assets.
If you require guidance on the best way to deal with splitting assets, speak to us at Conscious Separation; we will help you approach the division of assets in the best way possible.
