When a couple separates in Australia, their assets must be divided between them in a just and equitable way. This division may be formalised in a financial agreement or consent orders negotiated between the parties. If they cannot reach agreement, they can apply to the Federal Circuit and Family Court for financial or property orders.

If a party files a court application, a Judicial Officer assesses the couple’s financial circumstances, including the pool of assets available for distribution and each party’s contributions.

Filing an application with the court

A couple must make a sincere attempt to reach agreement before they apply to the court for consent orders or court orders. The terms of any agreement reached can be set out in proposed consent orders which are filed with the court. If the court approves the proposed orders, they become binding and enforceable.

Each party must provide to the other full and frank disclosure of all their assets, liabilities and financial resources. The duty to disclose endures until the case has been finalised, and failure to disclose can result in an order being set aside.

Are there time limits for property settlements?

An application for a financial or consent order must be made within one year of the date of the divorce order for a married couple and generally within two years of separation for a de facto couple. An application for property settlement can only be made after this in exceptional circumstances.

How does the court divide assets?

The court’s ultimate goal is to achieve a fair and equitable outcome. Once the pool of assets to be distributed has been identified, the court will consider the contributions made by each party in the acquisition, maintenance and conservation of an asset. The court will examine each partner’s financial and non-financial contributions to the assets. It will also look at the future needs of both parties, including how much time each will spend caring for children, each party’s mental wellbeing and health, and their employability. The court weighs these factors as it deems appropriate.

What are marriage assets?

The pool of assets includes all earnings received during the relationship, and everything purchased with those earnings. It also includes any debts acquired during the relationship. Assets in the name or control of one party and jointly owned assets are incorporated in the asset pool. Generally only assets that were held at the time of separation are included, except where an existing asset was used to purchase a new asset.

Is superannuation a marriage asset?

The court considers superannuation an asset and superannuation is part of the asset pool for distribution in accordance with the rules of superannuation funds.

The contributing member can retain the whole superannuation benefit, but receive a lesser share of other assets. Or the court can make a “splitting order”, where a fund is divided between the couple in a specified amount or percentage. Or the court can make a “flagging order”, so that when the superannuation fund matures, an agreed amount will be distributed to the other partner.

Is a trust a marriage asset?

The court views assets held in a trust much like any other marriage asset, in that they will be considered shared assets unless one spouse has maintained total control over the trust. The court considers whether either of the spouses has benefited from the trust, in the form of salary, expenses, or a loan. They also look at the history of transactions and how the parties have previously treated the trust.

Are inheritances marriage assets?

The timing of the bequest is the most important factor in deciding whether an inheritance is a marriage asset. For example, if one party receives an inheritance before the couple separates, it may be seen as the recipient’s financial contribution.

An inheritance received early in a marriage may be considered irrelevant in light of other contributions made over the life of the marriage. An inheritance received later in a relationship may be given more weight, and an inheritance received after separation is seldom included in the asset pool, unless the pool is too small to assure a fair settlement for both parties.

How does the court treat windfalls?

If either spouse receives money through a windfall, such as a gambling win, this is usually considered joint income and part of the marriage asset pool.

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