The Family Law Act sets out the process that family courts follow when deciding how property should be divided after separation.

You should also use this same process when negotiating your own property settlement.

The key legislative provisions include:

• Married couples – property division: section 79 of the Family Law Act

• Spousal maintenance (married couples): sections 72 and 75 of the Family Law Act

• De facto couples – property division: section 90SM of the Family Law Act

• De facto partner maintenance: section 90SF of the Family Law Act

When resolving property matters, the family courts aim to bring the financial relationship between separated parties to an end, providing certainty and finality.

The Court will only make consent orders if it is satisfied they are just and equitable.

Any proposed orders should reflect this principle and take into account all relevant circumstances.

Four Steps

Step 1: Identify and value all property

The first step is to identify and value all property as at the date of the agreement or the filing of consent orders.

This includes:

• property and liabilities owned before the relationship began that still exist

• property and liabilities acquired during the relationship

• property and liabilities existing after separation.

You will need to identify:

• Assets, such as real estate, businesses, superannuation interests, vehicles, furniture, jewellery, shares, and bank accounts (joint or individual)

• Debts, including credit cards, mortgages, personal loans, leases, salary sacrifice arrangements, buy now pay later obligations, tax debts, and student loans

• Financial resources, such as trust distributions, long service leave entitlements, wages, dividends, interest, or other income

• whether assets or debts are owned individually, jointly, or with a third party.

Parties may agree on values or obtain valuations from professionals.

In some cases, valuation is important in assessing whether the proposed orders are just and equitable.

Superannuation interests can be complex to value and may require expert advice.

Step 2: Identify each party’s contributions

The second step is to consider each person’s contributions to the relationship, including:

• direct financial contributions, such as income from employment (regardless of whether it was used for living expenses or asset purchases)

• indirect financial contributions, such as gifts or inheritances

• non-financial contributions, such as renovations, repairs, or unpaid work in a family business

• household and parenting contributions, including caring for children.

Contributions also include property brought into the relationship by either party.

It is not necessary to list or value every contribution, particularly in long relationships.

Courts take a holistic approach, rather than using mathematical calculations, and determine an overall percentage contribution for each party.

If relevant, the Court will consider the economic impact of family violence on a person’s ability to contribute, such as where violence limited their capacity to earn an income.

The contribution percentages must be just and equitable in the circumstances.

For example, parties may agree that contributions were equal (50/50), or that a different division better reflects their respective contributions.

Step 3: Consider current and future circumstances

The third step involves assessing each party’s current and future needs.

The Court will consider a range of factors, including (where relevant):

• the economic impact of family violence on a party’s present and future circumstances

• age and health

• income, earning capacity, and financial resources

• any waste of property or financial resources

• existing liabilities and how they were incurred

• care arrangements for children and the need to provide suitable housing

• necessary living expenses and commitments

• responsibilities to support others

• eligibility for pensions or benefits

• a reasonable standard of living

• the length of the relationship and its impact on earning capacity

• capacity to gain or maintain employment

• whether maintenance would assist a party to improve their earning capacity

• the financial circumstances of a new cohabiting partner

• child support obligations

• existing court orders or financial agreements

• any other relevant matter.

These factors are considered collectively.

The Court may make an adjustment in favour of one party, or no adjustment at all, depending on the circumstances.

Step 4: Make a final adjustment to ensure the outcome is just and equitable

After considering contributions and future needs, the Court may adjust the percentages to ensure the overall division of property is just and equitable.

This final percentage represents the ultimate division of the property pool.

If you require further information or advice on how you should divide your property, feel free to book into a Free 30 Minute Consult at Munce Legal below.