The Federal Circuit and Family Court of Australia considers a wide range of factors to determine whether there should be an alteration of property interests. This is widely recognised in the legal profession as the ‘4-step process’. In summary, the steps are as follows:
1. What is the pool?
(a) In other words, what are the assets (property, funds in bank accounts, shares), liabilities (mortgage, credit cards, Afterpay) and financial resources (entitlements from a trust) of the parties.
(b) If the values of any of the assets are disputed, the parties may choose to appoint a valuer to determine the value of a particular asset.
2. What contributions were made by the parties during the relationship?
(a) There are three (3) main types of contributions, namely:
(i) Financial contributions;
(ii) Non-financial contributions (such as contributions to the acquiring, maintaining and improving of property); and
(iii) Home maker and parenting contributions (such as contributions to the welfare of the family or to the care of a child of the relationship).
(b) Whether you are married or in a de facto relationship, these contributions are the same.
(c) This is not a strictly mathematical approach and all contributions are factored in, not just financial ones.
3. What are the future needs of the parties?
(a) The Court is required to assess and consider further adjustments based on the present and future financial positions of each party including a range of factors, including:
(i) the age and state of health of each party;
(ii) the current earning levels and likely future earning levels of each party;
(iii) the effect of the relationship (if any) upon earning capacity;
(iv) whether either party is cohabitating with someone else;
(v) the financial resources available to each party;
(vi) whether either party has the care of children and, if so, the financial arrangements for the care of those children (including payment of child support).
4. Is the proposed division just and equitable in all the circumstances?
(a) After making assessments in relation to the above three steps, the Court must consider whether the proposed division of assets is just and equitable in all the circumstances, as well as what the structure will be of the settlement.
(i) For example, if one party has a large sum of superannuation and the other party only has a nominal amount, the Court may order a superannuation split in their assessment of what is fair.
(b) The Court considers what assets and liabilities each party will retain and/or whether any asset needs to be sold and proceeds of sale need to be divided.
So, to answer your question, if you were the sole income earner and your partner was primarily a stay-at-home parent, providing care for your household and children, these contributions are heavily considered by the Court and are just as significant as the financial ones.
For example, consider the cost to your family if your partner has given up their full-time job to raise and support your children (income plus superannuation, career progression, etc.). Now consider how much it would cost your family to pay for someone to maintain your home (including cooking, cleaning, ironing, washing clothes, landscaping, gardening, etc.), as well as childcare expenses per child. Instead, your partner takes the children to/from school, to extra-curricular activities, cooks for the children, provides care, and maintains the home, while you have the luxury of continuing to progress your career. It is clear why they should be entitled to a significant portion of the asset pool.
If you would like to find out more about what your property settlement may look like, contact our Family Law team today on (02) 8197 0105, or contact@streeterlaw.com.au, so we can discuss the 4-step process and how this affects your personal circumstances.
