The breakdown of a marriage or de facto relationship can be incredibly stressful. Both parties want to achieve the best possible outcome for themselves. Consequently, dividing assets can be a difficult process.

What does the asset pool include?

The asset pool is the total net value of all matrimonial assets, including assets, liabilities and superannuation interests:-

• in the name of both parties;
• in the name of either party; and
• under the control of one party.

Identifying `matrimonial’ or `relationship’ assets available for distribution between you and your ex-spouse or de facto partner is an important and sometimes complex step in a property settlement. If you and your ex-partner cannot agree which are matrimonial or relationship assets, the court may have to decide.

The court’s usual approach is to value the matrimonial/relationship assets as at the date of trial (not at the time of separation), which may be years after the commencement of proceedings. Between the dates of separation and the trial, the value of assets may have significantly risen or fallen. The court will consider any changes in value and, if appropriate, attribute such changes as being a contribution by a party. Depending on whether such change is positive or negative, it may increase or decrease that party’s overall entitlement.

There may be consequences if a party attempts to remove an asset from the pool by disposing of it before settlement. If a party wrongly disposes of an asset after separation, the court will consider the factual circumstances surrounding that disposal. It may decide to notionally treat the value of the asset to the matrimonial/relationship assets as part of the share of the person who dealt with it.

How are Matrimonial Assets Valued?

Although essential to resolve a family law property settlement, valuation of matrimonial assets can be contentious. Here’s how the value of many of these items is determined:-

Real Property

Land and homes are usually the largest value shared assets. Parties are often able to agree on a value after appraisals from real estate agents. However, it is generally better for the parties to jointly engage an independent expert valuer, as the value is more precise than an appraisal. This is required by the court if there is a dispute over value.

Business Interests

Parties should jointly instruct an independent expert such as a forensic accountant to carry out a valuation of a business, even if the business has an in-house accountant. In some cases, the value of the business will simply be the value of its assets minus its liabilities. In other cases, it is far more complex.

Motor Vehicles

A jointly appointed expert can be used to ascertain the value of a motor vehicle. If the value of the vehicle isn’t high, a website such as Redbook can be used to obtain a market value, which the parties can agree to adopt.

Furniture, jewellery and artworks

The court tends to adopt a conservative approach towards valuation of furniture, jewellery and artworks, generally preferring the second-hand value to the insured or replacement value. Independent valuations can be used, but you should consider whether their cost is likely to outstrip the value of the items.

How does the Court Divide the Matrimonial Assets?

If mediation and/or other negotiations fail and a settlement is only achievable by going to court, the court will decide what it believes is ‘just and equitable’ for both parties.

The court will:

1. Consider the value of the assets after the payment of any liabilities;
2. Consider the contributions made by each party, including:
   • Financial contributions;
   • Non-financial contributions;
   • Contributions as homemaker;
   • Contributions as a parent;
3. Assess the current and future circumstances of the parties referring to factors including:
   • the age and state of health of each party;
   • the income earning capacity or disparity between the parties;
   • the length of the relationship and its effect on each of the parties’ income earning capacities; and
   • who will be the children’s primary carer in future;
4. Determine, in the whole of the circumstances and the adjustments made (percentage wise) to the contributions and circumstances of the parties moving forward, whether the division of assets is just and equitable.

The court can apply as much weight to these factors as it considers appropriate. There is no set formula for calculating how much each party will receive.

Here to Help

Contact us to receive advice on the best approach for your situation and your likely range of entitlements.