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How does the Family Court decide matters ?

Division of assets, liabilities and financial resources

When the Family Court is deciding on a property settlement, it follows a 4 step process.

1. First, the Court determines the value of the asset pool. The asset pool includes all assets, liabilities, superannuation entitlements and financial resources of you and your spouse as at the date of trial.
2. Second, the Court decides what proportion of the asset pool each party should receive based upon their contributions. This can include contributions at the beginning of the relationship, during the marriage or after separation. The Court considers each party’s financial and non-financial contributions. Non-financial contributions include looking after children and the household in general. Types of contributions are set out in section 79(4) of the Family Law Act (the Act).  A copy of section 79 of the Act is attached for your information. 
3. Third, the Court decides whether the division of the asset pool should be adjusted because of factors set out in section 75(2) of the Act. These are often referred to as the ‘future needs’ factors and they include earning capacity, age, health and caring responsibilities for children. A copy of section 75(2) of the Act is attached for your information.
4. Fourth, the Court looks at the result of the first 3 steps to determine whether the result is fair and equitable. If not, it can make further adjustments.

As there is no formula to determine the appropriate division of assets, liabilities, superannuation and financial resources, there is a range of likely settlement outcomes for each matter.

The Family Court has a great deal of discretion regarding the weight it gives certain contributions and ‘future needs’ factors. As a result, it is not possible to precisely predict the outcome of a Court hearing.

Division of Superannuation

Often in a marriage one spouse will earn more than the other and therefore build up more superannuation. However, the Court usually finds that the other spouse has indirectly contributed to the build up of this superannuation (for instance through their own financial and non-financial contributions or because couples can be seen to build up assets and resources during their marriage as a joint effort or endeavour).

There are a number of ways in which the Family Court can deal with superannuation entitlements as part of a property settlement.

The Court might decide to divide superannuation:

• evenly;
• in the same proportions as other assets, liabilities and financial resources; or
• in another proportion.

The Court can order that the spouse with less superannuation retain more of the other assets to offset the other party’s greater superannuation entitlements.

Alternatively the Court can choose to physically divide superannuation entitlements. This is known as ‘superannuation splitting’. Superannuation in one party’s name is transferred to the other party’s name to be accessed upon retirement.

Part VIIIB of the Act sets out the way in which the Court can deal with superannuation entitlements. A copy of Part VIIIB of the Act is attached for your information.

Payment of Spousal maintenance

Spousal maintenance is an ongoing periodic or lump sum payment from one spouse to the other spouse for continuing living expenses. You might have heard spousal maintenance being referred to in American television shows as ‘alimony’. It is separate from child support which is paid towards the costs of children of a relationship.

The Act provides that a person has a potential claim for spousal maintenance against their spouse if they can establish that:

• given their current income and income earning capacity (excluding means tested government benefits) they are unable to meet their reasonable living expenses; and
• given their spouse’s income and income earning capacity, and taking into account their spouse’s reasonable living expenses, their spouse can reasonably be expected to provide financial support to them.

Whether you or your spouse have a potential claim against the other for spousal maintenance will depend on your particular financial positions.

Our team Time limits

If you have been divorced, any application to the Court for property settlement or spousal maintenance must be made within 12 months of your divorce.

In limited circumstances, the Court may grant leave to make an application outside of that time limit, but it should not be assumed that leave will be granted.

Applying this to your situation

When we meet with you, we will advise you how the Court would be likely to decide your property and financial matters.

This does not mean that your matter will end up in Court. Fortunately, most of our clients are able to reach a negotiated settlement and only a small proportion of our clients need a Court determination of their property and financial matters.

However, understanding how the Court would be likely to decide your property and financial matters can be helpful in determining what a ‘fair’ settlement would be in the eyes of the law and what sort of a settlement your spouse might be expecting.