Good question. And the answer is…sometimes! But certainly not always. And, as far as courts and lawyers are concerned, 50/50 is not a starting point for working out a fair split. This is because each case must be assessed on its own facts and circumstances, in order to work out what division of assets would be considered ‘just and equitable’ (fair).
As you can imagine, there are many situations in which a 50/50 equal division of assets would simply not be fair. For example, what about a short relationship of 3 years where at the start Party A owned a home with $500,000 equity and Party B only had $20,000 in savings.
Should Party B get half of the home? While this is a rather simplistic scenario, and in real life settlements there are other relevant factors to consider (contributions, age, health, income earning capacity, care of children etc etc) the short answer is – probably not. It simply wouldn’t be fair. Or, to use the language of the Courts, it wouldn’t be ‘just and equitable’.
So how do Courts and lawyers work out how to divide property? They follow a tried and tested four-step process that has evolved over decades of property settlement cases in the Family Courts. This four-step process helps to calculate each party’s range of entitlement in a property settlement.
Here is a short outline of the four-step process. For more in depth information including a Step-By-Step guide to a legally binding property settlement, see our Property Settlement eGuide.
Step one – What is in the property pool?
Establish what is in the property pool by identifying and valuing the property of the parties, including assets, liabilities and superannuation. This involves making a list of all items and their current values.
Step two – What were the contributions?
Assess the contributions of each party to the property pool. Contributions come in many forms: financial, parenting, homemaker and non-financial contributions.
Step three – What are the future needs of the parties?
Identify the current and future needs of each party (e.g. age, health, income, dependents and other factors). Next, assess whether there should be an adjustment in favour of either party based on those factors.
Step four – Just and equitable division of property in a legally binding way
Work out a proposal for the division of property that is ‘just and equitable’ (a fair distribution of property based on the information gathered in the first 3 steps) and then ‘formalise’ your settlement in a legally binding way.
eDivorce Property Settlement Kits
Whether you are married or de facto, we can assist. Our personalised legal documents can help you to apply to the Court for a binding property settlement without the need for expensive legal fees. Click here to find out more.
Want to divide superannuation as part of your settlement? We can help with that too. Click here to find out more.
We hope you enjoyed today’s blog.
The eDivorce team
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