It is a common misconception that a divorce is an all-encompassing process that involves both divorcing your spouse and also dividing your finances, however the law views a divorce and a property settlement as separate matters.
‘Divorce' is the process of legally dissolving a marriage, which while it will enable a person to legally re-marry in the future, does not take care of the division of the parties' asset pool automatically.
A divorce can be applied for after 12 months from the date of separation, and can be made by either party on their own, or both parties jointly.
A ‘property settlement' is the process of the dividing the parties; assets, liabilities and superannuation and properly documenting the division either by way of a court order or a financial agreement.
The property settlement process involves 4 steps:
- Assess the net asset pool, including superannuation at the time of the property settlement. The values of assets and liabilities are taken at the date a property settlement is affected, and not at the date the parties separated.
- Assess the financial and non-financial contributions made throughout the relationship by both parties including income earned, lump sum financial contributions and contributions as homemaker and parent.
- Assess whether there ought to be an adjustment (in percentage terms) to either party for future needs. This will arise where one party has an inferior earning capacity to that of the other now and in the future and/or has the ongoing care of a child of the relationship.
- The last step is to look at the first 3 steps to ensure the result is ‘just and equitable'.
Ultimately, it is important to seek legal advice if you have separated from your partner to assist you in navigating your situation. We can provide you with expert legal advice and advise you whether it is a divorce, property settlement (or both!) that you require to be able to move on with your life.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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