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Property Settlements – Step Two

Under the Family Law Act 1975, the court and legal system often use a 4 step process to decide what might be an appropriate division of assets between you and your ex partner.

In this 4 week blog series, we are going to explore 1 step at a time to help you understand the family law process you may find yourself involved in. This is week 2 and we are looking at step 2.

If you missed our 1st post in this series, you can check it out here.

Make sure you like and follow us on Facebook to see each post as it is released.

Step Two: Assess the Parties’ Contributions to the Asset Pool

What are contributions?

Depending on the length of your marriage and whether there are children of the relationship, a Court will then consider the contributions that you have each made to the acquisition and maintenance of those assets of liabilities.

Contributions can be direct or indirect. Contributions can also be financial or non-financial. A direct financial contribution may be the payment of a mortgage using your wage. An indirect financial contribution to that same mortgage may be paying for the groceries or utilities, which then frees up your ex-partner’s wage to go directly to the mortgage. Non-financial contributions are things like parent duties, home duties or performing maintenance to a property.

How are contributions calculated?

Non-financial contributions are deemed no less valuable than financial contributions.
Ebony Cunningham - Bersee Legal

It is often the case that the longer a relationship is, the more likely it is that contributions will even out over time. This is also the case where there are children of the relationship, and a party has had extended time off work to perform parenting duties. Non-financial contributions are deemed no less valuable than financial contributions.

If you have been in a relatively short relationship (less than 6 years for example) and there are no children of the relationship, then contributions may be assessed to more closely align with each of your respective incomes.

Lump Sum Contributions and Timing

If you or your partner bought significant assets into the relationship, such as equity in a former house that was sold to purchase your current family home – then your sole or increased contribution to these assets will recognized.

Similarly, if you received an inheritance or lump sum monetary gift from your parents during the relationship, this too is recognized.

Whilst there is some mathematical element to working out contributions to assets and liabilities, it is not a purely mathematical exercise.
Ebony Cunningham - Bersee Legal

The timing of lump sum contributions is important – for example, of you received an inheritance after you separated but before a property settlement was negotiated, then you could be taken to have made the sole contribution toward this asset. That is, unless, the inheritance is property that you and your partner helped your parents maintain during their lifetime, or the inheritance is paid because of assistance you and/or your partner helped your parents during their lifetime.

We’ve identified the contributions, but how are they quantified?

We work to allocate a percentage to each party, representing their share of the contributions.

Whilst there is some mathematical element to working out contributions to assets and liabilities, it is not a purely mathematical exercise.

You can see how complicated it can be to consider the nature of different assets/liabilities and then how the parties contributed to each of them. Where one party has made primary contributions to a large or several assets, we may look at contributions made to the property pool on an asset by asset basis. We can deal with different assets differently as part of an overall settlement, based on the parties’ differing % contributions to each asset.

Otherwise, we more often look at the contributions made to the entire asset pool on a global basis – assigning a single % to each parties contribution to the entire asset pool. For example, 50/50 or 55/45.

For real life examples of how family arrangements are reflected in percentage terms, see our 4th blog post in this series.

Next week we look at Step 3: Adjustments for Future Needs.

Make sure you like and follow us on Facebook to see each post as it is released.

If you have questions about property settlement matters, you can contact one of our experienced staff to discuss how the Family Law system may apply to you.

Ebony Cunningham – Senior Associate

Ebony graduated with Honours in a Bachelor of Law and Legal Practice and a Bachelor of Behavioural Science (Psychology) in 2011.

Ebony specialises in the areas of family law, criminal law and civil litigation. Ebony is a member of the complex criminal panel and the family law general panel for the Legal Services Commission of South Australia.

Contact: ebony@bersee.com.au
(08) 8725 6969

Legal Secretary: Ms Lauren Lewis
Contact: lauren@bersee.com.au