How is property settlement determined?

When a couple separates or divorces in Australia, one of the most important legal steps is deciding how to divide their property, assets and debts. This process is called a property settlement, and it can apply whether or not the couple was married or in a de facto relationship.

 

The Family Law Act 1975 sets out the legal framework, and the courts follow a structured approach to ensure that the division is just and equitable. While many settlements are reached through negotiation or mediation without going to court, the same principles usually apply.

 

Step 1: Identify and value the property pool

The first step is to identify and value all of the existing assets, liabilities and financial resources of both parties. This step requires all financial disclosure documents to be exchanged.

 

This includes:

 

• Real estate (family home, investment properties, land)
• Bank accounts, shares, superannuation
• Vehicles, personal belongings and businesses
• Debts, such as mortgages, credit cards, personal loans

 

All property is included, regardless of whether it is in one person’s name, joint names or held through a company or trust.

 

Step 2: Assess contributions

The court considers what each party contributed to the relationship, both financially and non-financially.

This can include a consideration of :

• Initial contributions (what each person brought into the relationship)
• Financial contributions during the relationship (income, paying bills, buying property)
• Non-financial contributions (renovations or maintenance work)
• Contributions to the welfare of the family (homemaking, parenting)
• Contributions after separation (such as paying the mortgage or caring for children)

 

The court is also required to consider the effect of any family violence to which one party to the relationship has been subjected and the impact of same on the ability of that party to make contributions.

 

Step 3: Consider the current and future circumstances

The court also looks at the current and future circumstances of each party to ensure fairness.

 

Factors may include:

• The effect of any family violence
• Age and health of each party
• Earning capacity and employment prospects
• Care of children and level of parental decision making
• Financial resources available to each person

 

Step 4: Ensure the outcome is just and equitable

Finally, the court considers whether the proposed division is fair in the circumstances. This does not necessarily mean a 50/50 split—settlements are based on what is reasonable, taking into account contributions and the current and future circumstances of both parties to the relationship.

 

Resolving property settlements

Most couples reach an agreement through negotiation or with the help of lawyers and mediators. If an agreement is reached, it can be formalised by:

 

• A Binding Financial Agreement, or
• Consent Orders approved by the Federal Circuit and Family Court of Australia.

 

If agreement cannot be reached, the court make a decision about what division will be just and equitable in all the circumstances.

 

Property settlements in Australia follow a structured process designed to balance past contributions and future needs. Every case is different, and the division depends on the unique circumstances of the couple.

 

Do you need advice? Our experienced family lawyers in Sydney and the Illawarra are always here to support you and will provide you with a clear property settlement outcome.