Divorce Settlement in Australia – Who Gets What?

A divorce is easily one of the most stressful events you can experience in life.

For many, the split leaves ex-couples at their most barbaric behaviour, focusing only on what they can get out of the settlement.

So, let’s answer that very question –

Who gets what? What’s in it for me?

Having a divorce lawyer help settle the case can ensure that all these questions get the answers they need.

But alas, let’s break it down for you!

A Primer on Divorce Law in Australia

Divorce law varies around the world. However, in Australia, issues of divorce come under the Family Law Act (1975), which stipulates the principle of no-fault divorce.

This means that the court does not consider why the marriage ended, only the grounds for the breakdown of the marriage to show no reasonable likelihood that the two parties will again reunite.

READ: ‘How long does it take to get a divorce in Australia?‘

Who Gets What in a Divorce?

Splitting assets during a divorce can be a complicated and emotionally charged process. It is essential to fully disclose all assets and liabilities to accurately assess the net asset pool, which includes both parties’ contributions and future needs when determining the division of assets.

In Australia, the Family Court plays a crucial role in ensuring that property and assets are divided fairly between both parties.

Marital Vs. Personal Property

Marital Property

This includes any assets or property acquired during the marriage, regardless of whose name is on the title. Marital property is subject to division between the parties. Examples include the family home, joint bank accounts, vehicles, and any investments or businesses started during the marriage.

Personal Property

Personal property refers to assets that were owned by one spouse before the marriage or acquired individually, such as through inheritance or gifts. However, even personal property can be considered for division if it has been intermingled with marital assets. For instance, if an inheritance was used to purchase a shared home, it may be treated as marital property.

Financial & Non-Financial Contributions

Financial Contributions

These include direct financial inputs such as income, savings, and investments made by each spouse. The court will assess how these contributions have helped acquire, maintain, or improve marital assets.

Non-Financial Contributions

Non-financial contributions are equally important, including homemaking, child-rearing, and other unpaid work that supports the family. The court recognises that these contributions are essential to the overall well-being and functioning of the family, even if they do not directly generate income.

For more information on financial and non-financial contributions, read this resource from the Federal Circuit and Family Court of Australia.

READ: ‘The Biggest Pet Peeve in Divorce Cases: Who Gets the Dog?‘

Future Needs of Both Parties

Age and Health

The age and health of each party play a significant role in determining future needs. An older spouse with health issues may receive a larger share of the assets to account for potential medical expenses and the inability to earn income.

Earning Capacity

The court examines the earning capacity of both parties, including their education, skills, and work experience. A spouse who sacrificed career opportunities to care for children may receive a larger share of assets to compensate for their reduced earning potential.

Standard of Living

The court considers the standard of living enjoyed during the marriage and strives to maintain a similar standard for both parties, particularly when one spouse may have relied on the other for financial support.

Care of the Children

Primary Caregiver

If one spouse has primary responsibility for the care of the children, this will influence the division of assets. The court may award a larger share of the family home or additional financial resources to ensure the children’s stability and continuity.

Child Support

While child support is a separate legal obligation, the court considers the overall financial arrangement, including the division of assets, to ensure that the children’s needs are met.

Future Support

The court also considers future child-related expenses, such as education and healthcare, when dividing assets. This ensures that the primary caregiver has sufficient resources to provide for the children’s needs moving forward.

How is Property and Assets Divided in a Divorce?

The Family Court of Australia has clearly outlined the property division of assets and property.Assets are always aimed to be distributed equitably. Keep in mind that this does not necessarily dictate that assets will be divided equally. Separate property can be used to determine a fair settlement. Consideration of each individual’s economic circumstances will also be evaluated.
Distribution can occur in a number of ways. Either party agree on a fair distribution, you seek to formalise your agreement (pending approval of consent in the family court), or finally, if you cannot reach an agreement, you apply to the court for financial orders, including the division of property or payment of spouse. When a financial order is made, each party is bound to follow it.

Who is Responsible for Debt After a Divorce?

When dealing with divorce disputes, splitting assets is the primary focus. However, debt can also be an issue. As previously outlined, equality is always the goal. So, if one spouse gets a higher division of assets, that may also be accompanied by more debt obligations. Assets and liabilities, including individual and shared resources such as properties, debts, and financial accounts, are both considered during a divorce.

Prenuptial Agreement

A prenuptial agreement, also known as a binding financial agreement, is a legally binding document that outlines how assets and debts will be divided if a marriage ends. In Australia, these agreements are recognised under the Family Law Act 1975 and can also apply to de facto relationships.
For a prenuptial agreement to be valid, it must be in writing, both parties must receive independent legal advice, and the agreement must fully disclose each person’s financial situation. The signing must be voluntary and free from any pressure.
Prenuptial agreements offer significant benefits, such as simplifying the separation process and reducing the risk of disputes. They can also strengthen relationships by fostering clear communication about financial matters, which can, in turn, reduce the likelihood of divorce.

Learn more about prenuptial agreements and divorce from Canstar.

Superannuation in Divorce Settlements

Superannuation is often one of the most significant assets to be divided during a divorce in Australia. A financial settlement is crucial in this context, as it focuses on the division of assets and debts, including superannuation, to achieve a fair outcome for both parties. Unlike other assets, superannuation is considered property and can be split between both parties as part of the divorce settlement.

Under Australian law, superannuation can be divided in one of three ways:

1. Splitting the Superannuation: This involves transferring a portion of one party’s superannuation to the other’s superannuation fund. The funds remain preserved until retirement, just like any other superannuation benefit.
2. Flagging the Superannuation: This option places a hold on the superannuation account until a specified event occurs, such as retirement, at which point the funds are divided.
3. Not Splitting the Superannuation: In some cases, the superannuation may not be split but rather taken into account when dividing other assets. This is often done when the superannuation balance is relatively low or when both parties agree to offset its value with other property.

The Family Court considers several factors when determining how superannuation should be split, including the length of the marriage, the contributions made by both parties and their respective future needs. It’s important to note that while superannuation is treated as property, it remains subject to the same preservation rules, meaning it cannot be accessed until retirement or other qualifying events.

Given the complexity of superannuation splitting, it’s advisable to seek legal advice to ensure that your interests are protected and that the division is carried out fairly and in accordance with the law.

Discover more about divorce and superannuation.

Spousal Maintenance

Spousal maintenance is financial support paid by one spouse to the other after separation or divorce when one spouse cannot adequately support themselves. The Family Court may order spousal maintenance based on factors such as the applicant’s age, health, income, and caring responsibilities, as well as the other spouse’s ability to pay. Maintenance can be awarded as interim, periodic, or lump-sum payments, depending on the circumstances. Applications must be made within specific time limits, making it crucial to seek legal advice promptly to ensure your rights are protected.

Learn more about divorce and spousal maintenance

What is My Wife Entitled to in a Divorce Settlement in Australia?

In Australia, there is no set formula for determining what a wife is entitled to in a divorce settlement. A legal document, such as a binding financial agreement or consent order, plays a crucial role in outlining the division of assets and financial obligations, ensuring both parties adhere to the agreed terms. Instead, the Family Court takes a holistic approach, considering a range of factors to ensure a fair and equitable division of assets. These factors include the length of the marriage, each spouse’s financial and non-financial contributions (such as income and homemaking), and the future needs of both parties, including their age, health, and earning capacity.
The court also considers who will have primary care of any children from the marriage. While the division of assets aims to be just, it does not always result in an equal 50/50 split. The outcome is based on the unique circumstances of each case, making legal advice crucial to understanding your specific entitlements and achieving a fair settlement.

O’Sullivan Legal, Your Legal Advocates in Divorce Matters

Whenever you deal with a divorce, it is important to keep a level head and avoid letting your emotions dictate your actions. Legal documentation is crucial in formalising financial agreements between separating or divorcing spouses, ensuring clarity and preventing future disputes.

By actively consulting a family lawyer during the process, you can avoid making mistakes and steer clear of anything you may later regret.

Find out more about our divorce law services at O’Sullivan Legal.

Consult with us today to see how they can help you.