When you think about your assets, you may think it’s obvious how they will be separated.

However, the court doesn’t necessarily see your relationship the same way you do.

Here we look at the factors that the Court takes into consideration when dividing assets. 

Let’s Start at the Very Beginning

It is important to know that the Family Court of Australia aims to honour financial and non-financial contributions, and to reach equitable outcomes. Generally speaking, the court does a good job of this. But most people do not need to go to court. You can get advice and support for negotiations to divide your assets without going near a court. 

You and your spouse can go about dividing your assets in different ways, but first, decide to be rational about it. It will save enormous amounts of money, time, and stress. Every lawyer and every judge will tell you the same thing. 

You can: 

  • Make your own decisions about division of assets. 
  • Mediate. 
  • Collaborate. 
  • Have your lawyers negotiate between you. 
  • Go to court. 

After any of these methods are complete, you will need to have legal documents drawn up. 

How Does The Family Court Go About Dividing Assets?

Most legal advice you receive will be based on what your lawyer thinks the court would do in the case you set out for the lawyer. The advice will usually be given as a range of percentage based outcomes. That is because the law is imprecise, and there can be considerable variation between the opinions of different lawyers. 

Regard any early advice you receive as indicative and preliminary. Advice cannot be confirmed until all of the facts and information are known and agreed or arbitrated on. 

The 5 Steps of the Court’s Approach

The Family Law Act says that the court needs to: 

  1. Decide if there is a need for it to take any action. 
  2. Identify your assets and value them, then calculate your liabilities and deduct them to arrive at a nett asset pool. 
  3. Look at what each of you contributed during your marriage or relationship, and weigh contributions up against the pool of assets. (This is really about inheritances, gifts from family, and assets brought into the marriage rather than income earned during the marriage.) The court must also look at non-financial contributions. 
  4. Look at what each of you needs in the future (needs are defined in the Family Law Act).
  5. See if the division that has been arrived at seems equitable in all of the circumstances. 

Your financial planner, accountant, or lawyer can help you to identify and value your assets and liabilities, being step 2. There may be disputes about values and what is to be included in the asset pool. You will need legal advice or negotiation to clarify or resolve that.   

You will probably need legal advice about contributions, needs, and the overall outcome, at steps 3, 4, and 5, to know how the law might see your particular situation. 

There is no formula for dividing assets. There are no fixed percentages that you will get because you are a man or woman, or because you were the breadwinner, for example. Every case depends on its own unique circumstances. 

Extraordinary Contributions

All financial contributions are looked at, but the most significant are not wages and salaries, but what are called extraordinary contributions. That would include assets held at the start of the relationship, and significant gifts from family, including inheritances. 

The larger and more recent the extraordinary contribution is, the more relevance a court will place on it. There is no formula or method for deciding on the significance of contributions. You will need legal advice if it is an issue for you. 

Non-financial Contributions

The law looks at non-financial contributions, as well as financial. The most common examples of non-financial contributions are the care of children and a home, but it can include building and maintenance of a property, or unpaid work in a business, for example. 

Future Needs

There is a list of needs set out in the Family Law Act, and the lawyer’s jargon for these is ‘s.75(2) factors’. These are things the court will take into account in deciding on a division of assets between you. 

The Act lists 19 factors. Most commonly the relevant factors will be age and health, income, the need to care for children, a reasonable standard of living, contributions, and length of relationship. 

With no set formula, division by the Court can go either way. Outcomes will either be predictable or unpredictable. However, you will need legal advice to know how your needs will be seen by the law. The best way to divide assets is by decisions made between yourselves. If you can be rational and open about it, you will be able to divide your assets in a way that works for the whole family. A court does its best, but it doesn’t know your family like you do. 

 Call (03) 9078 6980 or enquire online for the complete personalised approach to separation without court.