Splitting assets in a divorce: what am I entitled to?

Divorce can be a challenging and stressful experience for many. On top of the emotional burden you may have, wrapping your mind around the legal processes can be hard.  

After living life as a married couple where there is little separation in ownership, it can be confusing and stressful to figure out how to split assets in divorce. This process often creates friction and leads to disagreements, which is why it is common to seek legal counsel.  

At Le Brun & Associates, our Family Lawyers can keep you protected with our vast experience with the process of divorce and splitting assets.  

What to do if you are going through a divorce 

Divorce itself is a relatively straightforward legal process. A Divorce Order can be obtained after twelve months of separation, with evidence that you and your ex-partner are married Australian citizens or residents, and there is an ‘irretrievable breakdown’ of the relationship.  

The granting of a Divorce Order does not resolve property settlement or parenting matters between you and your ex-partner. You will also have to amend any Wills or Powers of Attorney, and your insurance policy’s beneficiaries. 

You can apply for a property settlement after you and your partner have separated. Once you have been granted a Divorce Order, there is a time limit of twelve months to make a property settlement application to the court.  

After this period, you may only apply if your ex-partner agrees or if the court grants permission in the case that certain grounds are satisfied. It is therefore recommended that you finalise your splitting of assets before a Divorce Order is granted.  

How splitting assets work in a divorce 

There are a few ways finances can be divided after divorce. If you have a prenuptial agreement, called a binding financial agreement in Australia, you will have already determined how assets will be split in the case of a divorce. 

If not, if you and your ex-partner agree on how assets are split, you can formalise this agreement by applying for a consent order or making a financial agreement. 

If you and your ex-partner cannot agree how to split assets after divorce, dispute resolution or mediation can help you to reach a resolution. If no agreement is reached after mediation, you can then apply to the Court for financial orders, and the Court will determine the division of assets and payment of spouse maintenance. 

How does the Court how assets are split in a divorce? 

It is difficult to determine how much an individual is entitled to when they split from their spouse or de facto partner. The Family Court follows a four-step process which is used to decide the division of assets in divorce.   

Identifying the pool of assets 

Before it is decided how assets are split in a divorce, it is imperative to identify the pool of assets between you and your ex-partner. The pool of assets includes anything that is owned by you and your ex-partner, whether the ownership is joint or individual.  

These assets could include property, shares, vehicles, businesses, cash, jewellery, and even artwork – anything of value except superannuation. The Family Law Act rules that it does not matter whose name the asset is listed under.  

Even if you do not hold any assets in your name, anything that is owned by your ex-partner becomes part of the assets split between the two of you. Even assets held within other legal entities like companies or trusts are included in the asset pool. 

Once the value of this asset pool is determined, the Court will look at all liabilities held by you and your ex-partner both individually and jointly. The value of the liabilities is then deduced from the value of the asset pool. This remainder is the ‘net pool’, and this is the amount that will be divided between the two of you. 

Superannuation as an asset  

Superannuation is not included in the asset pool as it cannot be sold so that proceeds are divided. However, it is still considered in the division of assets in divorce. The process of splitting superannuation includes: 

  1. Valuing your superannuation 
  2. Coming to an agreement on the division of its value 
  3. Making an application with the Court 
  4. Providing a copy of the order to your trustee of your superfund  

Due to superannuation being kept in a super fund until retirement age, you might not be able to receive this amount until this age is met. 

Assessing contributions made by each party 

Once the net pool has been determined, the next step of asset splitting in divorce is to assess the contributions made by each party during your marriage.  

This are four types of contributions: 

  1. Direct financial contributions include wages, savings, bonuses, and profit from investments that each partner has earned. 
  2. Indirect financial contributions can include inheritances or gifts received by either party. 
  3. Negative financial contributions are financial losses incurred by either party. This includes instances where they reduced the value of assets, such as excessive gambling or substance abuse. The loss incurred may be deducted from their financial contribution.  
  4. Non-financial contributions are non-monetary contributions that could include raising children and domestic duties.   

The Court often considers financial and non-financial contributions to be equal, such as if one party stayed at home to raise the children so the other party could work full-time to support the family financially.  

Direct financial contributions through assets that were owned individually before the relationship become less relevant with time. For example, if one party had savings before a 10-year relationship, this financial contribution would become irrelevant to the assessment of contributions.  

If the relationship was short-term, however, any significant savings or assets could be considered as direct financial contributions.  

Adjusting for needs in the future 

Once it has been determined what contributions each party has made in the relationship, the Court will consider what needs should be met in the future.  

A range of factors are considered, which include:  

  • The age of each party and state of health 
  • The income, property, and financial resources of each party 
  • Whether a party has care of any children under the age of 18 
  • The receipt of any pension, allowance, or benefits 
  • The length of the relationship and its impact on a party’s earning capacity 

It is usual for the party in a weaker financial position to receive an extra percentage of the asset split.  

Ensuring the division is just and equitable  

The Court will ensure that the division of assets in a divorce is just and equitable by evaluating factors such as the length or the relationship and if there are children involved. Typically, in long-term relationships, it is considered just and equitable split assets in a divorce. If the relationship was short-term, this may differ.  

What percentage of assets am I entitled to in a divorce? 

It is difficult to ascertain what percentage each party is ‘entitled to’ when splitting assets in a divorce. As you can see, it is a complicated legal process, and the Court will follow the above process to come to an equitable split between you and your ex-partner. 

It’s a good idea to reach out to Family Law experts that can prepare you for how assets are split in your divorce. They can help to make sure you are protected and achieve a just outcome. 

Choose Family Law experts to support you in your divorce 

Le Brun and Associates is an expert family law firm in Melbourne that can advise you on matters surround divorce and asset splitting. Our team is experienced with family law matters and supporting individuals through complicated court processes. Contact us today for a free 30-minute consultation.  

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