When you separate, you’ll want to know how much you’ll receive from your divorce property settlement.
Under the Family Law Act 1975, Courts can change property ownership if they think it’s fair .
I n making such decisions, Courts must weigh various factors, including each party’s contributions to the property and their future needs.
The Courts are required to look at the financial and non-financial contributions made by each party to the property.
In valuing a non-financial contribution, the court will place the cost of the work as if another person had done it.
For example, if you fixed the fence of the matrimonial home, then you should get a quote to estimate how much money was saved, and also how much the new fence increased the value of the property.
A divorce settlement is an agreement that is reached between a married couple as to how they will separate their finances after their divorce. It is the final legal statement between the married couple for documenting the terms of their divorce.
How long does a financial settlement take?A financial settlement can be finalised in as little as two weeks if the parties are agreeable to the terms of the divorce settlement. In the event that there are disagreements, the process of mediation may take a couple of months.
If the matter goes to court, a financial settlement may take up to 3 years.
Jane and John have a total of $1,000,000 in their asset pool.
This includes all bank accounts, property, and debts.
Here is their balance sheet:
Assets
Liabilities
Superannuation
Net Total of Asset Pool = Assets – Liabilities + Superannuation = 1,600,000 – 830,000 + 230,000
In this divorce property settlement example, the Net asset pool is $1,000,000
They are now going through a financial separation and want to know how an Australian property settlement works.
Facts of the example case
John and Jane have been married for 7 years.
Before they met each other, John owned a property in Sydney with $1 million dollars and had a mortgage of $600,000 on it.
John and Jane both had superannuation and kept their accounts largely separate.
They are both working and earning similar amounts.
They have one child together, Emma, who is 3 years old.
PART A – Identify the asset pool
Part B – Identify the contributions of the parties
John and Jane have negotiated and have calculated what their contributions were to the relationship.
As the parties were in a ‘medium-length’ marriage (7 years), they will have to look at their financial and non financial contributions, and see if there are any special adjustments warranted.
As John entered the relationship with an asset worth $400,000, he is significantly higher on financial contributions.
John and Jane have calculated that their contributions would be 75% to John and 25% to Jane, however, due to the length of the marriage, they have agreed that Jane will receive a 5% adjustment for her contributions to their matrimonial property.
Part C – What are the future needs of the parties?
As there is one child, there will need to be an adjustment to the parent who is looking primarily after the child.
A general rule is that for each child, you should allow for an adjustment of between 2-5% per child.
Please note that if there were no children, there will be no adjustment to either parent.
Part D – Is this just and equitable?
The settlement appears just and equitable as both parties are walking away with a significant proportion of the pool.
You can check our guide on how are assets divided in a divorce.
The divorce property settlement split has decided to divide the property 65/35, meaning John will receive $650,000 and Jane will receive $350,000
As for who keeps the family home after separation, that is another consideration entirely.
This is just one of many divorce property settlement examples that we could potentially discuss with you based on your circumstances.
Ultimately it is up to the parties to make decisions as to how they would like to receive the funds and what they would be happy with.
If the parties cannot make a decision, the court will make it for them.
