When faced with the breakdown of a relationship, everyone wants to know what percentage of the property they will get. For some, that is the most important question. Others may have other priorities to consider but still at some stage that thought will surface.
There's a lot of mythology hanging around about this percentage question. "The woman always gets 60%", "She won't be entitled to anything until we have been together for two years," and so the talk in the coffee shop, pub or lunchroom continues.
I always explain to my clients family law is not a scientific exercise; there is no mathematical formula that calculates how your property will be divided. Rather, the percentage is arrived at by applying the four steps contained in the Family Law Act.
The first step involves figuring out what is the pool of assets to be divided. This means identifying and valuing the assets and liabilities including superannuation. It may also involve looking at financial resources like interests in family trusts.
Once the pool has been identified, the second step looks at considering how each party has contributed to the assets. This includes considering both financial and non-financial contributions. Contributions are both direct and indirect contributions, including contributions as both home-maker and parent. There is no specific rule for how these contributions are weighed against each other but it is usually a global overall assessment.
Having reached an assessment of how each party has contributed and arriving at a percentage (e.g. 50/50, 60/40, etc.), you take a step back and consider if the contributions percentage should be adjusted to take into consideration what is broadly considered to be the "future needs" of the parties. The Family Law Act lists a number of matters to be taken into consideration in this step and it includes the age and state of health of the parties, the ability of each party to earn an income and their responsibility to care for others. This may result in an adjustment to the percentage split.
The fourth step is probably best described as a "reality check" to ensure the result created by the first three steps leads to a fair and equitable result.
Applying these four steps is subjective and the result it creates will vary for each individual’s circumstances. You can't say there are hard and fast rules for what is the right percentage without first applying the steps contained in the Family Law Act.
In future blog posts, I'll look I more detail at the types of contributions and future need factors.