During the course of divorcing families often have to face the question of property settlement. Property settlement can include real property and financial holdings as well as the value of personal items such as cars and jewellery. In addition, any debts the couple hold together must also be allocated for repayment. The responsibility for payment of any shared debts must be assigned to one party or the other or settled out of the joint assets prior to distribution of the couple’s holdings. While this can be done between the two people dissolving the marriage and/or de facto partnership, the process often requires the assistance of legal professionals and the Court system. As a result, in an effort to come to a fair and equitable agreement regarding the division of a couple’s assets, questions must be answered and oftentimes formulas are used.
If a couple cannot come to an agreement regarding the distribution of their shared ownership in property, both real and financial, the professions will begin by using a four-step analysis of the couples shared ownership assets.
Step 1: Asset/Liability Identification
- Asset identification includes; income from businesses owned jointly or separately, salary information, jointly held property, superannuation values, cash assets, investment assets, the value of cars, jewellery and possibly inheritances
- Liability identification includes; outstanding mortgages, student loans, car loans, personal loans and business loans
- Previous Agreements; any agreements made prior to or during the marriage regarding the distribution of assets in the event of the dissolution of the marriage or partnership can be taken into consideration at this juncture
Step 2: Contributions to the Marriage/Partnership
- Financial contributions; Monies contributed to weekly, monthly and yearly expenses of the family by one or both parties
- Non-Financial Contributions; Child care, homeschooling, spousal/partner care, home care
Step 3: Future Financial Needs of Both Parties
- Employment; Will one or both parties be employed and able to meet their monthly financial obligations?
- Children; Will one party or both share the financial responsibilities for providing for children?
- Retirement; Is one party retired and dependent upon the income of another?
- Disability; Is one party disabled and unable to hold gainful sustainable employment?
Step 4: Equitable Effect
In this fourth and final step, the Court and the parties review the outcome of having answered the above questions and calculated a preliminary decision regarding the distribution of both assets and liabilities. It is in this fourth and final step that the question of what is fair and equitable must be determined and any exigent circumstances can be taken into consideration. And while the final outcome from steps 1-3 often yields an outcome that is reasonable for both parties, if it does not, this is where the Court can take into consideration altering the agreement to create a fairer and more equitable outcome.
While utilizing these four steps might not yield the perfect outcome initially, it does give the couple and the professionals, as well as the Court, a relatively objective place to begin the process of asset and debt division. Hence, if the process does not yield an immediately agreeable outcome, continued patience and compromise is highly likely to do so over a reasonable amount of time.
If you find yourself in need of assistance with this or any other legal issue, please contact the law offices of Owen Hodge Lawyers. At Owen Hodge, we are always happy to assist clients in understanding the full ramifications of any and all of your legal needs. Please feel free to call us at your earliest convenience to schedule a consultation at 1800 770 780.