How the Family Court Decides Property Settlements
When a relationship ends, one of the most important issues to resolve is the division of assets and liabilities. Financial matters may include the division of property, superannuation, and liabilities, as well as issues of spousal maintenance. In Western Australia, the rules that apply depend on whether the couple was married or in a de facto relationship.
- For married couples, property settlements are governed by the Family Law Act 1975 (Cth).
- For de facto couples in Western Australia, property settlements are governed by the Family Court Act 1997 (WA).
Although two separate laws apply, the Family Court of Western Australia uses the same principles when deciding how property should be divided.
The Four-Step Process
When considering a property settlement, the Court generally applies a four-step process:
1. Identify and Value the Asset Pool
The Court first determines the property available for division. This includes:
- Real estate, cars, and other property.
- Superannuation.
- Savings, shares, and investments.
- Debts and liabilities (e.g., mortgages, loans, credit cards).
Both parties are required to make full and frank financial disclosure of all assets and liabilities, regardless of whose name they are in.
2. Assess Contributions
The Court then looks at each party’s contributions to the relationship, which may be:
- Financial contributions –
Initial financial contributions – income, property owned at the start of the relationship
Financial contributions during the relationship– income earned during the relationship, inheritances, redundancy payments and gifts received.
- Non-financial contributions – work on renovations, managing finances, unpaid contributions to family businesses.
- Homemaker and parenting contributions – caring for children, maintaining the home.
These contributions are weighed to assess each party’s role in acquiring, building and maintaining the asset pool.
3. Consider Future Needs
The Court also considers whether one party should receive a greater share of the net asset pool because of their higher future needs compared to the other party. Future needs of a party include:
- Age and physical and mental health.
- Income and earning capacity.
- Care of children.
- Financial resources available to each party.
For example, if one parent will have the primary care of young children, or if one party has limited earning capacity due to health, the Court may adjust the division in their favour.
4. Ensure the Outcome is Just and Equitable
Finally, the Court considers whether the proposed division is fair in all the circumstances. The Court does not apply a formula or automatic 50/50 split. Each case is assessed on its own facts.
Key Principles to Remember
- The goal is a fair and equitable outcome, not an equal division
- Both financial and non-financial contributions are recognised
- The welfare of any children is an important factor
- Superannuation is treated as part of the property pool
- Full disclosure of assets and liabilities is essential
Can parties resolve matters without Court’s intervention
Where possible, parties are encouraged to resolve financial matters through negotiation or mediation, as this is generally quicker, less costly, and less stressful than going to Court. Once an agreement is reached, it can be formalised through Consent Orders or a Binding Financial Agreement, providing legal enforceability and finality. If an agreement cannot be reached, the Court has the power to determine a just and equitable division of assets under the Family Law Act 1975 (Cth) for married couples, or under the Family Court Act 1997 (WA) for de facto relationships in Western Australia.
Summary
Whether under the Family Law Act 1975 (Cth) for married couples or the Family Court Act 1997 (WA) for de facto couples, the Family Court applies the same guiding principles to property settlements. The focus is always on achieving a division of assets that is fair, just, and equitable, taking into account both past contributions and future needs.