There is sometimes confusion about how to divide assets when a marriage or de facto relationship breaks down. Here, we talk about how the Family Law Act deals with dividing assets of separated couples (also called a “property settlement”).
When can I apply to the Court for a property settlement?
You can apply to the Court for orders to divide your assets at any time after you separate. However, if you are already divorced, you must apply within 12 months. In a de facto relationship, you must apply within two years after the end of the relationship. In very limited circumstances, the Court can extend the time to apply.
If we can’t agree, how does the law divide our assets?
The Family Law Act undertakes a four step process: Firstly, the assets, liabilities and resources of each party are identified. Secondly, the Court assesses (as a percentage), the contributions made by each party to the acquisition, conservation and improvement of assets, as well as contributions made as parent and homemaker. Thirdly, the Court considers whether a further adjustment should be made for a party in a weaker financial position having regard to matters such as income disparity, health or the need to accommodate young children (called “future needs” adjustments). Finally, the Court determines whether the overall adjustment arrived at is fair and reasonable.
Are the steps the same for de facto couples?
For the majority of de facto couples who separate after 1 March 2009, yes. For de facto couples who separated before 1 March 2009, existing State/Territory laws (some of which are different to the Family Law Act) apply. However, those couples can agree to fall under the provisions of the Family Law Act.