The criteria in Australia that will determine a party’s claim to financial assets are as follows:
1. Identifying the Value of the “Pool” of Assets
The asset pool will be comprised of everything that the parties own. All real estate, shares, trust assets, businesses, cars, boats, tools, jewellery, cash etc will form part of the asset pool. Some things are incidental, such as personal effects, but even these things may still have a value and are therefore included.
It does not matter whose name these assets are in. The Family Law Act cuts across all legal entities and captures everything in which the parties have an interest. Other interests, for example where the “asset” is not in either party’s name but in which each person has a beneficial interest in the asset (also known as constructive trust) may also be included. Sometimes when clients first come to see us, they are worried that “nothing is in their name”. However, it is irrelevant as to whose name in which the asset is registered all the assets are scooped up into the property pool and grouped together. This is not to that stay the steps can – and in some cases need to – be taken to prevent the registered owner of those assets (if they are the sole registered owner) from selling or otherwise disposing of those assets without your consent. We deal with this issue regularly.
2. Contributions of Each Party
Both financial and non-financial contributions during the relationship and the property of the relationship are relevant. The law acknowledges that different parties bring different amounts of money and other assets to a relationship. As a general rule, the longer the parties are together, the less relevant the assets that the parties owned prior to the relationship becomes. For couples who have been together for 10 years or more, it is in most cases practically irrelevant.
A usual factor that is considered is who has earned income and the extent to which that income has been applied to looking after the family. However, contributions like looking after the family by raising children and home duties are also just as relevant. On this basis, there is usually not much adjustment either way – with notable exceptions in short term relationships, where there are no children or if one party had substantial assets by comparison when entering into the relationship. All these factors will need to be weighed in the balance.
3. Future Needs Adjustments
Adjustments based on future needs will often have a significant impact on how the pool of assets will be divided.
Some factors that the law considers relevant are:
- a persons’s earning capacity, compared to the other;
- a person’s age, compared to the other;
- a person’s health, compared to the other;
- if there are children, who will have primary care of them and to what extent; and
- a person’s ability to generate an income and especially if, taking into account the length of the relationship, one of the parties has sacrificed the opportunity for career advancement or skill development
These are known as the “future needs factors”.
These matters must be carefully evaluated. For instance, if one party has an illness, injury or other reason why his or her earning capacity is less likely to be as strong as the other party’s earning potential after the separation, there will probably be an entitlement to a decent adjustment in the favour of the person with less opportunity. Earning ability is one aspect in the division of property and there are different perspectives as to how these things can be assessed. Careful legal argument from your lawyer can be useful in pressing or opposing such a viewpoint on these matters.
4. The Deal Must Be “Just and Equitable”
This is an overarching principle which will be weighed by the Family Court (or FCFCOA) having regard to the particular varying circumstances of the particular facts before it. One party may realistically need more funds immediately, while for another party (such as a party with a strong earning capacity) that party may appropriately receive assets later. Current assets could, for example, mean proceeds of the sale of a property. An example of a deferred asset of superannuation.