When dividing your matrimonial or de facto property at the time of separation, your decisions can have lifelong consequences.
At Yarra Family Lawyers, we understand that your future financial wellbeing depends on receiving sound, clear and accurate family law advice when dividing your property.
We work with you and other professionals, including accountants and valuers, to reach a division of your matrimonial or de facto property that is fair and takes into account your future financial wellbeing.
Commonly asked questions
When can matrimonial or de facto assets be divided after separation?
After separation, both married and de facto couples can divide their property once they agree.
After separation, there is no waiting period before you can divide your property, so long as the relationship or marriage has broken down on an irretrievable basis. For married couples, you do not need to be divorced before dividing property.
Before applying to the Federal Circuit and Family Court of Australia for the division of matrimonial or de facto property, you must first comply with the prescribed pre-action procedures. In general, the prescribed pre-action procedures are:
- where it is safe to do so, participate in dispute resolution such as family counselling, negotiation, mediation, conciliation or arbitration;
- if dispute resolution is unsuccessful, write to the other party setting out your claim and exploring options for settlement; and
- comply as far as practicable with the duty of disclosure by exchanging relevant financial documents.
For more information on the pre-action procedures for financial cases, please follow the below link to the Court’s website:
https://www.fcfcoa.gov.au/fl/pubs/pre-action-financial
How is the division of matrimonial and de facto assets calculated?
There is a four-step process that the Federal Circuit and Family Court of Australia adopt to determine the division of matrimonial and de facto property. The four-step process is as follows:
- firstly, determine what the asset pool available for division is. This step includes calculating the value of assets minus any liabilities and determining the value of any superannuation.
- Secondly, determine what contributions were made by the parties to the pool available for division. This includes non-financial contributions such as the upbringing of children and financial contributions such as property purchased by one party before the relationship or marriage.
- Thirdly, determine the future needs of the parties. This requires analysing what property and financial resources each party has access to financially support themselves.
- And finally, make a just and fair split of the property based on the Court’s analysis of the first three steps.
The above four-step process is also used by lawyers when negotiating property division outside of Court. If you have a property settlement matter, you must receive independent legal advice to receive your fair share of the property post-separation.
How do we determine the value of the asset pool available for division?
To determine the asset pool’s value available for division, the parties need first to exchange what is called full and frank financial disclosure. The process of exchanging full and frank financial disclosure includes exchanging relevant financial documents, including:
- bank statements
- tax returns
- superannuation statements
- investment portfolios
- payslips
- mortgage statements
- credit card statements
- cryptocurrency portfolios
If either party jointly or solely owns real property, you will likely need to engage a real property valuer to determine that real property’s value. Likewise, if either party owns a business or any other asset such as plant and equipment, a suitably qualified valuer may need to be engaged to determine the value of that asset.
Once all relevant financial documents and valuations have been received, the parties should be in a position to be able to calculate the value of the asset pool available for division.
To read more about about the duty to make full and frank financial disclosure, please follow the below link to the Federal Circuit and Family Court of Australia’s website:
https://www.fcfcoa.gov.au/fl/pubs/duty-disclosure
What are considered to be contributions made by a party to the pool?
The contributions made by each party to the pool usually fall within three different categories. Those categories are:
- financial contributions
- non-financial contributions
- contributions to the care and welfare of the family
What are financial contributions?
Financial contributions are monetary contributions made before, during and after separation. Financial contributions can include real property purchased by one party before the marriage, income earned during the marriage, and payments towards maintaining an investment property after separation.
What are non-financial contributions?
Non-financial contributions are non-monetary contributions made by one party that increase the value of the asset pool available for division.
Examples of non-finanical contributions might include renovations to real property made by one party that has increased the value of that real property.
What are contributions to the care and welfare of the family?
Contributions to the care and welfare of the family are contributions made by one party as the home maker or primary carer of the parties’ children.
Contributions to the care and welfare of the family are often given as much weight as financial contributions, especially in cases where one party sacrifices their income and superannuation earning capacity and employability to stay home and care for the family.
How is the future needs of each party determined?
This step involves an assessment of each party’s future needs factors. Those factors can include:
- each party’s ability to support themselves financially including the income, property and financial resources of each party and their physical and mental capacity for achieving gainful employment.
- the age and state of health of each party.
- whether either party has the care and responsibility for a child under the age of 18, irrespective of whether that child is a child of the relationship.
- whether either party has commitments that impact their ability to support themselves financially, such as a commitment to care for an elderly parent.
- whether either party is eligible for a pension, allowance or benefit.
- the standard of living which is reasonable in the circumstances.
- whether the relationship has impacted the earning capacity of either party. This can include whether there was severe family violence that has impacted a party’s ability to achieve gainful employment.
- whether either party is living with someone else and whether the financial circumstances of that person affect the party’s ability to financially support themselves.
- the terms or any Federal Circuit and Family Court of Australia Orders in relation to the property of the parties.
- the terms of any Binding Financial Agreement or Pre-Nuptial Agreement entered into by either of the parties.
The Court has discretion as to whether it will give more or less weight to the above factors when determining the future needs of both the parties.
If the Court assesses that either party has higher future needs than the other party as a result of one of above factors, that party may or may not receive a greater percentage of the asset pool than they would have but for that future need factor.
We have reached an agreement; how do we formalise our agreement?
Once you have reached an agreement concerning how the asset pool is divided, you must formalise this agreement so that it is enforceable. There are two ways of formalising a family law property agreement that is enforceable, those are:
- by entering into a Binding Financial Agreement; or
- by asking the Court to make Final Orders by Consent.
What are Final Orders by Consent?
Final Orders by Consent, also known as Consent Orders, are Orders made by the Federal Circuit and Family Court of Australia at the request of both parties.
For the Court to make Orders by Consent, the Orders sought by the parties must be fair to both parties and wholly agreed to by both parties.
Before asking the Court to make Final Orders by Consent, you must seek independent legal advice from a solicitor to ensure that the Orders you seek are drafted competently for enforceability and fairness to both parties.
To read more about Property and Financial Agreements and Consent Orders, follow the below link to the Australian Government Attorney-General’s Department website:
If you have any questions regading the division of matrimonial or de facto property, contact us today for a free 30 minute initial consult