Busting a Property Settlement Myth: Losing Half the Day you are Hitched
A commonly held fear is that becoming involved with someone results in that party becoming entitled to half of the assets brought into the relationship by the other, upon a later split.
Fortunately, there is no blanket approach imposing a 50/50 split. The Family Law Act exists to provide “justice and equity” to people who separate, by overriding and adjusting the division of assets that would otherwise apply under common law ownership.
A husband of 30 years is therefore entitled to claim a share of the matrimonial assets even if they are all in the wife’s name. It all comes down to an assessment of factors including the “financial contributions” made by each party, to the acquisition, maintenance and improvement of financial assets over the years, the “non-financial contributions” towards such things as the home environment and nurturing the children, and the future needs and income earning ability of each party going forward. This can be very complex.
The Family Law Act does not create injustice or inequity by stripping away assets from one partner and giving them to the other where a split occurs following a short relationship.
As a broad rule of thumb, for a relationship of short duration, separating parties will be entitled to a settlement reflecting their initial contributions (an “asset-by-asset” approach) to the relationship. This is because the contributions made by each party during the relationship are not as significant to the outcome, as any initial disparity in contribution.
There are exceptions such as when children have resulted, or where an asset acquired in one party’s name has appreciated in value considerably during the duration of the short relationship or where the principles of justice and equity would otherwise dictate a different result.
The Family Law Act does not prescribe that a separation following a short relationship, results in an automatic distribution to one party of half of the assets contributed by the other. In the de facto setting there isn’t any jurisdiction for the Act to apply until the parties have been together (living as a husband and wife in a committed domestic relationship) for at least two years. After that period of time, the asset-by-asset approach may apply for a while. At the other extreme, an asset-by-asset approach might apply even after a relationship of 18 years but this requires unusual circumstances (separate finances, separate residences, separate holidays etcetera) to have prevailed.
For the majority of cases, there is no cause for concern for at least a couple of years after becoming involved with someone, by which time hopefully some idea of the nature of the relationship will be known.
In the words of the popular Australian television series “Married at First Sight” this would be an opportune time by which to have decided whether to “stay or leave.”
For more information, contact Murray Crawford at CLO Lawyers on 07 4631 9000.
Image: Photo by Marc A. Sporys on Unsplash
About the Author
Director | BEc, LLB, LLM (Applied Family Law)
With a passion for the law and a strong social conscience, Murray is a strong advocate who’s focused on achieving positive outcomes for his clients and supports the community through leadership positions with several not-for- profit organisations.