After my personal experience and information gathered from various sources, I thought listing them out will be a useful source of information for someone in need too. SO, here I list four crucial steps that comprise in property settlement, irrespective of whether the couple have prepared a financial agreement or have applied to the court for property division.
The Family Law Act suggests the partners as well as the courts, to follow the below guidelines while dividing property and finances after separation.
- Form Matrimonial Asset Pool
The matrimonial or marriage asset pool comprises of assets and debts brought into the marriage or acquired during the relationship. Any financial possessions whether owned directly or indirectly by both or either of the partners must be considered while listing the assets in the pool.
By assets, I mean: business entity, investments-shares, bank balance, fixed deposits, inheritances, jewellery, profits from business entities owned by either or both the spouses, automobiles, furniture, superannuation, estate, family residence etc.
By no means, only assets are considered in marriage asset pool. Debts are included too.
Debts may be : expenses, bills, loans, mortgages, credit card balance, bank overdraft, tax liability etc.
Net asset pool that is available for division is arrived at with this formula:
Net asset pool = Total assets- total liabilities.
- Weigh Contributions
The family court considers various contributions made to the household by both the partners during and after the relationship. The court weighs the contributions before deciding the ration of division of assets between the partners.
Other non-financial contribution: If you or your partner has put time and efforts in maintaining a property, or a business it is considered under non-financial contribution. The court calculates how much money a third party would have charged if hired for doing the same job while weighing the contribution.
Parental contribution: Parenting the child full time and taking care of their needs and other activities form equally important aspect of contribution done by a stay-at-home mum or stay-at-home dad. Note this!!
Homemaker contribution: Non-financial contributions by you and your partner, or who stays at home to take care of the household is called homemaker contribution. Household chores like cooking, cleaning, washing, doing the laundry are considered as equal contributions like financial contribution. It is no less than direct financial contribution in any way.
Direct Financial contribution: Any direct financial contributions by either or both the partners are considered during settlement process. Direct financial contributions can be monthly income, periodical payouts, capital gains, inheritances etc.
- Evaluate future requirements
The family court takes into serious considerations the future financial requirements of the partners. The factors are age, medical condition, duration of relationship, cost of living, current lifestyle, dependents to take care such as children below 18 years of age etc.
- Fair and unbiassed
A final and most important thing a court considers is if the financial and property settlement equation is fair to both the parties and is impartial.
If the court finds the property settlement arrangement by way of financial agreement is not fair and equitable and finds discrepancies in the agreement, it can overlook the financial agreement and hold back the Consent Orders.
Circumstances under which a financial agreement gets cancelled by the court:
There are few circumstances when a financial agreement lacks credibility in the eyes of the court and risks beings cancelled. Such instances are:
Interest on Superannuation: If the couple have a clause in the financial agreement that they will share the interest accrued on superannuation. Since there is no legal provision for the such an arrangement, the financial agreement is overlooked by the court.
Changed life situations: If the life circumstances of the family has changed significantly after the financial agreement is drawn, the court automatically withholds the implementation of the financial agreement.
Guidelines are not met: If the financial agreement is not prepared on the guidelines of the family law act regarding finance and property settlement after separation, then the financial agreement is not enforceable.
Unfair to any of the partner: If the financial agreement is unfair to any of the partner by putting that person in miserable condition, the court cancels the financial agreement.
Creditor’s interests: If the financial agreement cheats the creditor’s interest, it does not gain court’s approval.
Fraud: If the court feels the purpose of drawing a financial agreement is to deceive another party, the financial agreement is set aside by the court and a fresh property settlement arrangement is made considering the earlier stated four factors.
The video below shows how property settlements are addressed during a relationship breakdown: