The purpose of a property settlement is to bring about an end to the financial relationship between the parties. In order to divide the property evenly and equally, four steps must be taken.
- Identify the property
Logically, the property cannot be valued and divided unless all of the property is identified. Most commonly the identified assets include: real estate, vehicles, cash, stocks, superannuation, household goods and the like. The parties must also identify ant liabilities that they owe, such as: mortgages, personal loans, credit card debt and the like.
- Consider the contributions of each party
Next you must consider the contributions of each party. This step takes into consideration financial and non-financial contributions from before and during the relationship. Contributions can include: property, cash, wages and income, gifts received, work done to improve property, efforts put into starting and/or running a business, and contributions to the welfare of the family. A homemaker or stay at home parent is entitled to a share of the property and in many instances their contribution is considered about equal to a wage earner. However, this may not necessarily be the case where the direct financial contributions of the other party were large and/or the relationship was short.
- Consider the future needs of each of the parties
You then need to consider the future needs of the parties and whether an adjustment should be made to take into account one party’s greater future needs. Factors which may affect this step are: age and health of the parties, the ability for each party to support themselves in the future, whether either party is supporting another person (such as a child), and whether a party is being supported by another person (such as a new partner).
- Consider whether the proposed property settlement is just and equitable
The property settlement must be just and equitable to both parties.
Of course, property disputes can be avoided by entering into a financial agreement at the commencement of your relationship. These agreements are commonly known as prenuptial contracts. These agreements can nominate how assets are split if the relationship breaks down and are considered a good idea for parties entering into a relationship with significant assets.
At Mantzoros & Partners Lawyers we try to encourage our clients to be civil to their former partners and work towards an agreed property settlement. An agreed settlement can save years of legal proceedings and thousands of dollars in legal and Court costs.