If you’re going through a separation, you might want to know how your assets and liabilities will be divided in a divorce in Australia.
Are assets divided as part of the divorce process?
Although part of the same package, there is a fundamental difference between finalising your divorce and finalising your property settlement.
A divorce basically means that you are now legally separated and free to marry someone else, while a property settlement deals with the division of assets following your separation.
Unfortunately, this is the part that often causes the most problems in many divorces, but it does not have to be that way.
Does everything just get split 50/50?
Family Law in Australia requires that the splitting of your assets and liabilities be fair and equitable, but that does not necessarily mean that everything is split straight down the middle. There is no hard and fast rule as to who gets what, as each marriage is unique and comes with its own set of circumstances.
If you had a Binding Financial Agreement (BFA) drawn up, when or while you were married, the process will be much easier, as the BFA will lay out all the terms of the settlement, avoiding much tension and cut costs for both partners.
If no BFA exists, it can become a complicated affair, where numerous factors – such as length of marriage, individual contributions, children’s needs, earning capacities, age, health and the future needs of each spouse – must be considered. This process can benefit from professional legal and financial advice, particularly in long marriages where big asset pools have been accumulated.
How are assets valued in a divorce?
Once all assets and liabilities of the parties are identified, they are placed into an asset pool and valued as at the time of the settlement or when an application is submitted to the Court. It is essentially irrelevant in whose names these assets and liabilities are registered.
It is strongly recommended that you value all your assets and reach an agreement as soon as separation takes place.
What kind of assets and liabilities are included?
Assets include everything you own – jointly and individually. Money in the bank, properties, businesses, investments, insurance policies, vehicles, personal belongings, inheritances, and superannuation too. Everything.
The same principle applies to liabilities. Personal debt, credit cards, mortgage loans, the works. As with the assets, it matters not in whose names the debts are registered. You are theoretically both equally responsible.
Non-financial contributions made by either partner during the relationship need to be assessed and considered.
What are non-financial contributions?
Non-financial contributions can include looking after children while the other partner was working, upkeep of a home, which includes renovations, maintaining a garden or other properties, all adding value to the overall asset pool.
Non-financial contributions become more evident and crucial in marriages or partnerships where there had been only one breadwinner for a significant period of time.
Can superannuation be considered an asset to be divided on divorce?
It most certainly can, and it may form part of the overall settlement. Splitting of superannuation at divorce is however, subject to certain terms and conditions.
The length of the marriage and policy are taken into consideration. It must also be noted that the superannuation is subject to the terms of the policy and no one has access to any of it, until it becomes due on retirement.
Western Australia has its own set of rules regarding super in de facto relationships, and changes are in the pipeline. It’s best to keep a check on that.
Can assets be divided at divorce mediation rather than through the Family Court?
They certainly can. A great many divorces in Australia are settled through mediation. In rare cases where some points of dispute cannot be settled in mediation, these unresolved issues can then be resolved in the Family Court.
For family mediation in Perth that actually works, get in touch with me today. I have years of experience helping divorcing couples to settle their divorces quickly, amicably and affordably.