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Matrimonial Property Settlements

Matrimonial property settlement refers to the division of the husband and wife’s property following separation.

The law that relates to how property is divided following the breakdown of a marriage is set out in Part VIII of the Family Law Act 1975.

The Family Law Act encourages parties to reach an agreement without resorting to costly litigation. In fact, it is a procedural requirement that both parties engage meaningfully in negotiations to reach an agreement before filing an application in the Family Court of Australia. Although this is not a procedural requirement for matrimonial property matters dealt with in the Federal Magistrates Court of Australia, it is strongly encouraged.

Should one party refuse or fail to participate in primary dispute resolution (or in the event an agreement is not reached) then a person considering applying to Court must give the other party written notice of their intention to commence a Court case. This notice must outline the issues in dispute, the orders sought, a genuine offer to settle the matter, and a nominated time within which the other party must respond.

Where parties are unable to reach an agreement with respect to the division of the matrimonial property following separation, the Court may be called upon to determine how the property is to be divided.

If the Court is called upon to make a determination in relation to the division of the matrimonial property pool they must be satisfied that an outcome is just and equitable for both parties.

In order to determine what a fair and equitable division of property is, the Court has stated that the following process should be followed:

1.  Identify and value the net property of the parties (usually at the date of trial);
2.  Consider the contributions made by each of the parties as set out at section 79(4) of the Family Law Act (see below);
3.  Consider each of the parties future needs as set out at section 75(2) of the Family Law Act; and
4.  Consider whether the proposed order is just and equitable.

For the purposes of “Step 1”, property under the Family Law Act is considered to be all that is real and personal. This can include real estate, vehicles, shares, companies and even assets owned by a trust. It is important to note that superannuation is now considered “property”, and is therefore calculated in the settlement pool.

It is important to note that if a party disposes of property prior to the property settlement then the asset can be “added back” to the property pool for the purposes of achieving a settlement.

This is a safe guard against those parties attempting to defeat the rightful interests of the other party by disposing of assets.

In order to assess the “Step 2” the Court relies on the factors outlined in section 79(4) of the Family Law Act. Here the Court looks at the financial and non-financial contributions made within the relationship, namely:

  • Financial contributions made directly or indirectly by the parties towards the acquisition, conservation or improvement of any property i.e. income, gift or inheritance, or parent’s contribution towards the purchase of the matrimonial home.
  • Non-financial contributions made directly or indirectly by the parties towards the acquisition, conservation or improvement of any property. Such contributions will include, for example, a person’s contribution towards the care of the children of the relationship and contributions made as homemaker etc.

In order to assess “Step 3” the Court considers a non-exhaustive list of factors outlined in section 75(2) of the Family Law Act. These factors focus on the future circumstances of the parties. Some of these factors include:

  • The age and health of the parties;
  • Income, property, and financial resources as well as the ability to obtain gainful employment;
  • Who has the majority care and control of any children less than 18 years of age and the need to protect that party who wishes to continue the role of the parent;
  • Responsibilities to support the other party either through child support or spousal maintenance;
  • Whether there are any other financial resources such as superannuation, pensions or life insurance; and
  • The length of the relationship, including the period of cohabitation prior to the marriage.

Only after giving careful consideration to steps 1 to 3 will the Court turn their attention to “Step 4” by determining whether the proposals presented by the parties are just and equitable.

There is a one year limitation period that operates from the date parties are granted a Divorce within which to commence proceedings within the Family Court or Federal Magistrates Court relating to a Property settlement. An application outside the one year period will only be accepted if the Court has granted leave to the applying party and is satisfied that the party will suffer a significant detriment if a property settlement is not completed.

Should the parties reach an agreement prior to the final hearing, then the matter is formalised through one of the following avenues:

  • Consent Order – with the seal of approval of the Court; or
  • Financial Agreement – which is upheld by the Court providing it is fair and equitable to both parties.

It is important to understand that the way property will be divided between you and your former spouse will depend upon your individual circumstances and may not be the same as others you have heard about. A decision is made based on the facts of your individual situation and is based on bringing about the most just and equitable outcome in the circumstances.

Our experienced solicitors are able to assist you and give you intelligent, up to date advice to assist you to make an informed decision that is tailored to suit your specific circumstances.

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