In all property settlements there is a four step process which is followed by the Courts:
Step 1 – Creating an asset poolTo create the net asset pool all assets and liabilities of your relationship will need to be identified. These include personal assets and liabilities. It is essential that you tell Herman Bersee Solicitors all of your assets and liabilities to ensure that proceedings are fair. If you hide or do not advise us of your assets you may be found in contempt of court.
Assets are the things you own that have a value. Assets could include:
Car
House
Furniture
Liabilities can be seen as debts, where money is owed. Examples of liabilities include:
Car loans
Mortgage
Loan
Credit card balance
The net asset pool figure will then be calculated. The net asset pool is generally calculated using this formula Total Assets – Total Liabilities = Net Asset Pool. The net asset pool figure is the amount of money that will be divided.
If both parties cannot agree on a value of an item/s, for example a car, an expert will need to brought in to value the item.
Step 2 – Each Party’s ContributionThe court looks at how each party contributed to the relationship. The court has broken the contributions into four specific groups:
Financial
Parental
Homemaker
Non Financial Contributions
1. Financial ContributionsFinancial Contributions is all monetary contributions to the relationship and can include but is not limited to:
Wages
Amount of money each person had at the start of the relationship
Termination money
Lotto winnings
Once the financial contributions to the relationship has been identified, the court will look at which parties made contributions and when. It is essential that all information is disclosed to your representation, the other party and the court.
The court will only look at where the money in the relationship is being spent if there are allegations of wastage. Wastage is when a considerable amount of money is being used for the following:
Gambling
Drinking
Prostitutes
Drugs
A considerable amount of money will be determined on the weekly combined wage of the parties to the relationship. As a rule of thumb, 10% of the wage spent on any of the above is seen by the court as wastage.
2. Parenting ContributionsThese contributions could be described as the amount of parenting that was done, such as helping children with homework, taking them to school, spending time with them etc. There is no specified amount, however when one party works and the other cannot due to parental responsibility, it is seen as an equal contribution to the wage that the other party contributes to the relationship.
The Court is not concerned with the quality of parenting performed by the person claiming to be the main contributor to the parental responsibilities in the relationship. The availability of the parent claiming to have made the significant contribution is essential in determining the contribution percentage.
If the parents have made parental help for example hiring a nanny this will often be considered as a factor in discounting the amount of parental contributions provided by the party.
3. Homemaker ContributionsThese are the contributions made to the home for example vacuuming, cooking, washing etc. Homemaker contributions are very similar to parenting contributions.
The domestic duties performed in the relationship are considered as the homemaker contributions. When the Court looks at this contribution it is not concerned with the quality of the duties performed for example I vacuumed every day, but rather the fact that they were performed and who performed them.
When considering this contribution the main factors are whether or not the domestic duties were full or part-time concerned of the party who performed them and whether or not the parties made use of domestic help for example lawn mowing, cleaning lady, ironing lady. The use of domestic help whether it was paid of performed by a family member is often a factor in discounting the amount of domestic contributions provided by the person claiming that it was their responsibility.
Step 3 – Identifying NeedsDuring a property settlement, current and future needs will be taken into account. The following is a list of the needs that the court will look at:
Age
State of health
Income, property and financial resources
Physical and mental capacity to gain employment
Parent or sole carer under the age of 18
Commitments that are necessary to provide for themselves or a child
Responsibilities of either party to support another person
All parties are living a reasonable standard of living
Duration of the marriage
The maintenance of the property that affected the earning capacity of a party
The need to protect a party
Once the appropriate needs of each party have been identified the court will then look at the cost of each of these needs.
Step 4 – Who Gets What and Is It Just and EquitableOnce the splitting percentage of the asset pool has been decided it will then be determined what assets each person gets. In some cases the asset that the person obtains is over their percentage and they will need to pay the other person in order to keep with the percentages.
The final step in determining a property settlement is to assess if the settlement is just and equitable. The court will assess this by looking at:
The contributions to the relationship made by both parties and
The current and future needs of both parties.
The purpose of this final step is to determine whether the proposed settlement is fair, taking into account the above, to both parties.