When it comes to evaluating property settlements, the asset pool encompasses a wide range of properties, financial resources, and liabilities owned by the parties involved. In Australia, the division of assets in family law cases is regulated by the Family Law Act (1975).
It’s quite common for couples in relationships to purchase assets, such as properties, either jointly (as joint tenants or tenants in common) or solely under one spouse’s name. There are various reasons for this practice, including (but not limited to):
- One person entering the relationship with property solely in their name.
- One person having concerns about their credit history.
- Potential tax benefits.
- Inherited property by one party.
We often encounter clients who express comments, such as:
“The house is only in his name, so I didn’t think a property settlement could be made.”
“She owns an investment property in her name, which I know isn’t considered part of our joint assets.”
However, it’s important to clarify that these assumptions are simply common misconceptions.
The four-step process for division of assets
There is a legal framework that guides couples on how to divide their assets. Under section 79 of the Family Law Act (1975), the court follows a four-step process to determine the division of assets:
- Identifying and Valuing Assets: The first step involves identifying all the assets, liabilities, and financial resources owned by both parties. This includes properties, bank accounts, investments, businesses, superannuation (pension), and debts. These assets are then valued, either through agreement between the parties or with the help of independent valuations.
- Assessing Contributions: The court considers the financial and non-financial contributions made by each party to the relationship. This includes direct financial contributions (such as income, savings, and inheritances) and non-financial contributions (such as homemaking or caring for children). The court may also consider contributions made after separation.
- Evaluating Future Needs: The court assesses the future needs of each party, taking into account factors such as age, health, income-earning capacity, care of children, and financial resources. The court aims to achieve a fair outcome that addresses the parties’ reasonable future needs.
- Considering a Fair and Equitable Division: Finally, the court determines a fair and equitable division of the asset pool based on the factors mentioned above. This may involve an equal division or an unequal division based on the circumstances. The court considers what is fair and equitable in each particular case.
It’s important to note that the Family Law Act prioritises the welfare of any children involved in the family law matter. The court may give special consideration to the care and financial support of dependent children when making property settlement orders.
Additionally, it’s common for parties to negotiate and reach a property settlement agreement without involving the court. If the parties can agree, they can formalise their agreement through Consent Orders or a Binding Financial Agreement, which are legally binding documents.
Can a party make a claim on the asset pool even if the assets are not in their name?
The short answer is yes. In practice, if two individuals were in a de facto relationship or married, all property, regardless of whether it’s held solely in one person’s name or jointly, is likely to be considered part of the asset pool and potentially subject to division.
Identifying the asset pool is an important stage in negotiating a property settlement. We strongly advise seeking the guidance of a legal expert early in the negotiation process to receive tailored legal advice based on your specific circumstances.
If you have any questions regarding property settlement or any other aspect of family law, please contact our friendly family law team today on (02) 4929 4499 or book online. Headed by our Senior Lawyer Kasey Stewart, an Accredited Specialist in Family Law, you can trust our family law team to help you achieve the best results possible, for you and your children.
