How assets are divided in a divorce
One of the most stressful elements of ending a relationship is the process of dividing up your assets and debts. There are no hard and fast rules regarding property settlement so it is important that you seek advice from a qualified family lawyer to ensure you receive your fair share.
What is a property settlement?
Property settlement is the process by which assets and liabilities are divided following the end of a marriage or de facto relationship. It should be noted that property settlement is a completely separate process to formal divorce. Division of assets, or deciding “who gets what” can happen immediately after separation whereas couples must wait 12 months to divorce.
What assets are included in a property settlement?
In a settlement process you are required to disclose full details about your property and financial situation.
- Your home and any other properties owned
- Cars and other vehicles
- Household contents and personal property
- Investments and cash balances
- Debts such as mortgages and personal loans
The combined assets and debts go into what is called the property pool. It is this pool that is then split between the two former partners.
If you agree on the asset split
If you and your former partner have discussed and agreed a division of assets and debts, it is important that you seek the advice of a family lawyer to formalise this agreement.
There are two ways this can happen:
- Applying for a consent order. This details your agreed split which is submitted to the Court with a request for binding legal orders.
- Binding financial agreement. As discussed in this blog post, binding financial agreements often take the form of prenuptial agreements. They can, however, be made at the end of relationship to cover the financial settlement and support arrangements agreed between former partners.
What if you can’t agree an asset split?
If you and your former partner can’t agree between yourselves how to split your assets, the collaborative law approach can help you negotiate an agreement. It is rarely necessary for court proceedings to be necessary, however, should this be the case you will need to apply for a financial order to determine property settlement and spousal maintenance if applicable.
How does the court determine who gets what?
When addressing property settlements, the Courts will seek to reach an outcome that is fair and equitable. The following factors will be considered:
- Net assets value, ie. the value of what you own less any outstanding debts (eg. the value of your home less the outstanding mortgage).
- Financial contributions made during the relationship such as inheritance, salary, etc.
- Non financial contributions such as looking after children, maintenance of the home, etc.
- Earning capacity, ie what you are likely to earn in the future.
- What you need for the future – This will include consideration of who will be the primary care giver for children, the needs of those children and the age and health of each parent.
While this all seems complex, an experienced family lawyer will be very familiar with this process and can guide and advise you every step of the way.
Talking to a dedicated family lawyer is one of the most important steps you can take following separation. Whether you’ve just separated, or are seeking to formalise the division of assets, we can help you to understand your rights and responsibilities and gain a clear picture of your financial situation.
At Umbrella Family Law, we understand that separation is one of the most traumatic events a person can go through. We offer empathetic, supportive advice to help you navigate the separation and property settlement process.