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Parties of a marriage or a de facto relationship upon separation are entitled to seek to have the property of the relationship (“the property”) divided between them.
The property, otherwise defined as the pool of assets, is divided in accordance with provisions in the Family Law Act for married couples and the Family Court Act for de facto couples.
Property itself is almost everything imaginable with a monetary value and includes but is not limited to all real estate, house(s) and blocks of land, savings, shares, businesses, trusts, superannuation, cars, motorcycles, boats, caravans and furniture, etc.
The principles in relation to dividing the pool of assets and liabilities are similar for married and de facto couples with the exception being that while superannuation is usually included in the property pool for both couples, it is treated as an asset for married couples and as a financial resource for de facto couples. In Western Australia, there cannot be superannuation splitting orders made in the Family Court for de facto couples. Parties should seek independent legal advice regarding their particular circumstances and how the Family Court is likely to deal with their property settlement, including their superannuation entitlements, based upon the facts of their case.
In basic terms, to determine what property is able to be divided, the parties will first need to subtract all their liabilities from the pool of assets to ascertain the net value of the property capable of division. It is this net value of the property which is then capable of being divided. The Family Court has very wide powers in relation to altering the property interests of parties but will only make orders if it is just and equitable to do so.
To determine how the property is to be divided, or what Order should be made, the Court is required to take several factors into account. Principally (but not exclusively) these include:
- the financial contributions made directly or indirectly by or on behalf of a party to the acquisition, conservation or improvement of any property;
- the contributions (other than a financial contribution) made directly or indirectly by or on behalf of a party to the acquisition, conservation or improvement of any property;
- the contribution made by a party to the welfare of the family and any children of the relationship, including any contribution made in the capacity of homemaker or parent;
- the effect of any proposed order on the earning capacity of either party;
- the future financial needs of any party. The future financial needs are based on a number of factors including but not limited to the age, health, earning capacity of any party and whether any party has the day to day care of a child or children under the age of 18 years.
Upon determining how the property shall be divided, Orders can be made for such settlement or transfer of property as the Court determines.
Not all property settlements need to be determined by the Court. Parties are encouraged to attempt to reach agreement, with legal advice to assist in this process and have their agreement drafted and lodged in the Family Court seeking Consent Orders. Save for exceptional circumstances, it is mandatory for parties to attempt to resolve all issues in dispute, through pre action procedures as set out in the Family Law Rules 2004, in both property and children’s matters before commencing legal proceedings. It is mandatory for parties to attempt to reach agreement through mediation in both property and children’s matters before commencing legal proceedings.
When parties are going through such pre-action procedures, it is advisable for them to get legal advice prior to making any proposals or accepting any proposal from the other party. This is especially so as any agreement reached and accepted by the Court will ordinarily be final and binding upon the parties.
Please note that time limits apply, in relation to applying for property settlement orders in the Family Court, so parties should seek independent legal advice to ensure that they are fully aware of any time limits that apply to their particular case.
Family lawyer Richard Crane answers one of the most common questions about family law and cases in the short video below. Click play to watch.
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