When a couple separates in Australia, their assets must be divided between them parties in a just and equitable way. This division may be formalised in a Binding Financial Agreement that is negotiated between the parties (and usually their legal representatives). If the couple cannot reach agreement, they can apply to the Federal Circuit and Family Court (FCFCA) for a consent order or a Court order.
If a party files a Court application, a Judicial Officer (e.g. a Registrar or a Judge) assesses the couple’s financial circumstances, including the pool of marital assets and each party’s contributions. The Family Law Act 1975 is the legislation governing the division of matrimonial assets in Australia. This article looks at the way in which marriage assets are divided between separated partners, focussing on married couples.
Filing an application with the Court
A couple must make a sincere attempt to reach agreement before they apply to the court for a consent order or Court order. If the separated couple reaches agreement, the terms of the agreement can be outlined in proposed consent orders. This agreement must be filed with the Court. If the court determines that the agreement is fair, it will be approved and the proposed orders will become binding and enforceable.
Both parties are obliged to produce full and frank disclosure of all their assets and liabilities, including income, property, superannuation entitlements and other monetary resources. The duty to disclose endures until the case is 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 in generally speaking within two years of the date 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 all the marital assets have been identified, the Court will consider the contributions made by each party in the acquisition, maintenance and conservation of the asset. The Court will examine each partner’s financial and non-financial contributions to the marital assets. It will also look at the future needs of both the 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 in any fashion it deems appropriate.
What are marriage assets?
Marriage assets incorporate all earnings received during the relationship, and everything purchased with those earnings. It also includes any debts acquired during the marriage. Assets in the name or control of one party and jointly owned assets are incorporated in the asset pool. This only includes assets that were held at the time of separation, except where an existing asset was used to purchase a new asset (for instance, if cash from the marital pool is used to purchase a property).
Is superannuation a marriage asset?
The Court considers superannuation a marriage asset. Superannuation is part of the asset pool for distribution in accordance with the rules of superannuation funds.
The contributing member can retain the whole 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. Alternatively, 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 will 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 spouse receives an inheritance before the couple separates, it may be seen as the recipient’s financial contribution. This is more likely to be the case if the inheritance was invested in the family on items such as holidays, home renovations and reduction of their mortgage.
An inheritance received early in a marriage may be irrelevant in light of other contributions made over the life of the marriage. An inheritance received later in a relationship or 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.
If you or someone you know needs advice about the division of marriage assets after separation, contact Mid Mountains Legal.
