Property Settlements

Divorce is a completely separate process to financial or property proceedings. For advice please see our article Divorce.

When a relationship ends, resolving property issues can feel uncertain and overwhelming. Our family lawyers will provide you  a practical overview of how family law property settlements are approached in Australia, with a focus on the steps parties can take to negotiate an outcome, avoid unnecessary litigation, and understand the principles a court would apply if agreement cannot be reached.

Property Matters, Staying Out of Court

The vast majority of family law property matters settle out of court.[1] The family law system in Australia encourages parties to resolve their property  dispute even before commencing court proceedings by requiring each party to comply with “pre action procedures” imposed by the Court’s Rules. [2]

To comply with the requisite “pre-action procedures’ parties must exchange relevant information with the other party, invite the other party to negotiate a settlement including to attend mediation[3] and make offers of settlement.

The Family Law Act outlines the steps the family courts, and separating couples, should follow when deciding how property should be divided.

Parties should become informed about these steps as part of their preparation to start negotiations for a property settlement.

The Four Step approach to Property Disputes Applied by the Courts

The two most important elements of a family law property settlement are:

1. The contribution which each party made to the marriage or de facto relationship.
2. A comparison of each party’s “future needs”.

The Family Law Act 1975 (Cth) (“the Family Law Act”) provides how these matters must be considered (the steps to follow) in order to ascertain what will be with an appropriate division of the parties’ property.

Different parts of the Family Law Act address how to approach  cases where parties are or were married[4] or are or were in a defacto relationship[5].  The rights of parties under the Family Law Act either in a marriage or defacto relationship are similar.

The steps to follow are what the courts describe as the  “four-steps-approach”. These same steps are applied by the courts to ascertain what should be an appropriate property settlement when the courts must decide the split of assets  if the parties failed to settle the case, namely:

1. Assets – To ascertain what is the pool of property, liability and superannuation entitlements divisible between the parties.
2. Contributions – an assessment of the contributions which each party made whether financial or non-financial including contributions which a third party may have made on behalf of one of the spouses.
3. Future needs – an assessment of each party’s financial circumstances considering various factors including whether either has the primary care of children, their  income,  age and health.
4. Fair and equitable – whether the final outcome is fair and equitable[6].

There are other factors to consider in each case, for example whether one of the parties was a victim of the other’s family violence which may affect the assessment about contributions and future needs.[7]

For further information see our article “The Four-Steps Approach”

[1] Parties involved in a family law matter, settle their matter out of Court in ninety five percent (95%) of cases. See our article in our website at: https://turinimckeanlaw.com.au/how-to-settle-family-law-matters-well-outside-court/

[2] See Chapter 4, “Dispute Resolution” and Schedule 1 “Pre Action Procedures” of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021  at https://www.legislation.gov.au/F2021L01197/latest/text

[3] See definition at https://www.actlawsociety.asn.au/resources/mediation/what-is-mediation

[4] See PART VIII–Property, Spousal Maintenance and Maintenance Agreements, in particular, section 79 , entitled “Alteration of property interests” at  https://www.austlii.edu.au/cgi-bin/viewdoc/au/legis/cth/consol_act/fla1975114/s79.html

[5] See PART VIIIAB, Division 2 – Maintenance, Declarations of Property Interests and Alterations of Property Interests, in particular, section 90SM entitled “Alteration of property interests” at https://www.austlii.edu.au/cgi-bin/viewdoc/au/legis/cth/consol_act/fla1975114/s90sm.html

[6] See the article in our website entitled “Family Law Property Disputes: “The Four-Steps Approach”: https://turinimckeanlaw.com.au/family-law-property-disputes-the-four-steps-approach/

[7] Ibid.