Property Settlements - How They Work

Just How Much Are You Entitled To?

Traditionally, one of the hardest things to do after the break down of a relationship is to "divvy up" the assets and liabilities of the relationship. Who should keep the assets? Who should assume responsibility for the liabilities? Often if parties know what the legal process involves and are able to envisage the likely outcome if a Court had to split up the assets, it is easier to come to an amicable agreement and thereby save a lot of stress, inconvenience and expense.

Broadly speaking there are three (3) main issues in solving property disputes:-

1. Firstly, the parties must establish what assets and liabilities are attributable to the relationship.
2. Secondly, the parties must establish the value of that pool of assets.
3. Thirdly; how is that pool of assets to be split up?

The Pool Of Assets

The first step is to identify all of the major assets owned by either of the parties. Next, identify which of those assets were brought into the relationship (and by whom) and which were acquired during the relationship.

The liabilities of the relationship are identified in exactly the same way. Remember, the liabilities include not just the housing loan but also credit card loans, personal loans, debts to family members etc.

Assets that belong to one of the parties before entering into the relationship will remain the property of that party unless the party brings that asset into the relationship. There is no formal step required to achieve this, merely joint use of the asset may deem it to be joint property. As a rule of thumb, the longer the term of the relationship, the more likely that an asset will be regarded as a matrimonial asset.

It is important to highlight the distinction between an asset and a financial resource. Generally speaking, a financial resource is something which does not have any immediate cash value (e.g. a Superannuation Policy). A financial resource has a tangible benefit to the holder but cannot be utilised straight away. Make a list of all of the Superannuation Policies, Life Policies and other investments of the same nature held by both yourself and your former partner. The list should be as detailed as possible. It should include the institution with whom the policy is held, the policy number, the amount of contributions, when the policy was taken out, the nett current withdrawal value, the payout value upon maturity and any other relevant features of the policy.

Valuing The Assets

The test applied by the Court is the market value of the assets at the time of separation. Market value is generally accepted to mean the value which a Purchaser would pay a Vendor in an arms length transaction.

One of the greatest areas for dispute in property settlements is the differing valuations placed by the parties on the matrimonial assets. Traditionally, parties obtain their own valuations on each of the assets and attempt to establish some middle ground or seek an arbitrator to choose the correct valuation.

In many cases, if the parties cannot agree on a valuation of assets the key lies in agreeing upon a method of valuing the assets which both parties will be bound by. By following the agreed method, the parties will save themselves significant costs, time and angst.

Splitting Up The Assets

Contrary to some expectations, there is no automatic "50/50" split. The key consideration in deciding how the matrimonial pool will be split up is the contributions that have been made by both parties to the creation of the net matrimonial pool.

The contributions can be financial or non financial. For example, one spouse might earn a wage and utilise it for living expenses or the reduction of matrimonial debts whilst the other might be responsible for care of the children or for physical maintenance of the matrimonial assets. Non financial contributions might also include care for an aged or ill relatives, or effort to help establish or run the family business.

So far as it is relevant, a Court can also have consideration to any or all of the following:-

1. The age and stage of health of the parties.
2. The physical and mental capacity of each party.
3. Who will have the ongoing care or control of the children.
4. Commitments of either party to any other person.
5. The standard of living enjoyed by the parties prior to the split.
6. The extent to which the decision might have an effect upon the income earning capacity for either party.
7. The duration of the marriage.
8. Any child or spousal maintenance payments that have been made or are being made.
9. If either party is cohabitating with another person - the financial circumstances relating to the cohabitation.
10. The respective earning capacities of both parties
11. The financial resources available to either party.

Conferences

It is often beneficial for the parties to engage in informal "without prejudice" conferences to attempt to resolve their differences. The words "without prejudice" mean that whatever is said at the conference cannot later be used in any Court proceedings.

The proceedings at conferences will vary. In some instances, parties will pay for a mediator to chair the conference. In other cases, parties and their Solicitors will simply get together to discuss the issues.

If the institution of Court proceedings becomes necessary, the Court Rules insist upon various conferences with the aim of exhausting all possibility of settling the matter prior to proceeding to an actual Court Hearing. Such conferences are usually held at the Family Court and are chaired by a Registrar of the Family Court.

Formalising Agreements

If parties can reach an agreement on property settlement, it is extremely dangerous not to formalise that agreement This is done by an Application to the Family Court which is literally an Application to make the Orders with the consent of both parties.

There is a prescribed form for such an Application and the Court insists upon strict compliance with that prescribed form. Both parties must sign the form. It will simplify the details required to be shown on the Application greatly if both parties have obtained independent legal advice.

Court Proceedings - The Last Resort

In the event that the parties are unable to agree, it may be necessary to make an Application to the Family Court. In this case, instead of applying for Consent Orders you will apply to have a Family Court Judge decide the matter for you. This is most definitely a course of last resort. The expense and the time delays involved in Court proceedings are quite considerable and should certainly be weighty factors in the minds of both parties when negotiating property settlement issues.

It is important to remember that although proceedings might have been instituted in the Court, the possibility of settling the matter out of Court is by no means at an end and it is important to maintain an open mind and be commercially realistic at all times when dealing with property settlement issues.

It will assist both yourself and your Solicitor greatly if you are able to address all of the above issues at your first conference. It will mean that your Solicitor is able to give you much more accurate and meaningful advice in relation to your property settlement at a much earlier stage.