What many couples don’t expect during a legal separation is that a court-issued Divorce Order is just one part of the story. In reality, a legally granted divorce doesn’t address the many other matters that need to be resolved.
If you and your former spouse have made the decision to part ways, you are likely to have many questions.
Is my ex wife entitled to my superannuation? Does my ex husband have a claim over my end-of-year bonus or redundancy payment? Who gets to stay in the house during separation and in the long-term? Who pays the mortgage in the meantime?
Decisions need to be made around matters relating to asset and liability division including property, money, valuable personal effects, and debts. Custody arrangements, child support and spousal maintenance will also need to be negotiated.
These important matters are all addressed via separate processes to the divorce application itself. When asking questions around who is entitled to what, there are no hard and fast answers. The outcomes of discussions focusing on these matters will vary massively depending on the complexities of your distinct situation.
It’s important to take steps to understand your rights and entitlements, protect your interests, and obtain the optimal outcome. For example, who stays in the home might affect who takes responsibility for the primary care of your children. In turn, this could impact your entitlements to other assets.
Rayner Song has an expert team including some of the best family lawyers Glen Waverley has to offer. Here, we share our thoughts on what you might be able to expect in terms of entitlements.
Entitlements to shared assets
An immediate consideration is how the couple’s assets, financial resources and liabilities will be divided.
In this context, assets can include anything from the family home, to furniture, vehicles, jewelry, savings, super funds and severance packages. Even windfalls such as a lucky bet on the Melbourne Cup or lottery win might be included.
Examples of liabilities include debts, loans, mortgages and any other financial burdens that either party is deemed responsible for.
Meanwhile, financial resources are defined as items which may bring future benefit to a party in the future. One example would be trust distributions.
All of the above might be considered by the court when deciding how to divide assets.
Many people hold the misconception that this process will involve mud-slinging and long days in court, as often depicted by Hollywood. However, it may surprise you to learn that many divorcing couples are capable of amicably making these decisions by themselves.
If this is the case, once the specifics have been agreed to it’s important to make the terms legally binding. If not, it remains a possibility that one side might have a change of heart and move to alter the terms in the future. This could be prompted by the other party inheriting money, obtaining a pay rise, or re-partnering.
The importance of legally binding agreements
Making your agreement legally binding is a vital step. Without it one party could have a legitimate claim to assets their former spouse may acquire after separation. Such assets might include future savings, inheritance, superannuation funds, redundancy payments, houses acquired, and bonuses.
Any debts accrued by one party after the marriage has ended may also indirectly become the shared responsibility of the other.
So, while not technically a requirement of divorce, a legally binding agreement is strongly advised for the long-term protection of your assets and finances.
Where couples agree on what the division of their assets will look like, one of the following should be developed:
● a Consent Order – a written document developed without the requirement for legal advice. It is then filed with the court where a registrar will consider whether the terms are ‘just and equitable’. If this is found to be the case, the court will turn the agreement into a binding court order. Rarely is a court hearing required.
● a Binding Financial Agreement – a private written agreement, which must meet the requirements set out by the Family Law Act 1975. This includes the need for each party to obtain independent legal advice from a lawyer before signing.
Starting the process of negotiating a property settlement doesn’t have to wait until a Divorce Order has been granted. This process can commence as soon as the former couple makes the decision to separate.
It is often in the couple’s interests to resolve their property settlement as soon as possible after separation has taken place. If the couple is unable to reach an agreement between themselves, each party has only 12 months after divorce to apply for property orders, without needing special permission from a court. This can be an expensive process, and there is no guarantee it will be granted.
What happens when a divorcing couple can’t agree on who is entitled to what?
Where a separation results in disputes over property entitlements and division, your lawyer can offer support. They will help with identifying what assets and debts the other party has, and negotiating a property settlement. If no agreement can be reached, or if the other party refuses to disclose their financial position, you may need to go to court.
How does the court make decisions around entitlements to assets in a divorce?
If court intervention is necessary, the division of assets and liabilities will be decided based on several considerations.
The first step is to consider whether to alter the property interests between the parties at all. For example, consider two people who were in a short relationship, and did not mix their finances or have children together. In this instance the court may decide it wouldn’t be just and equitable to alter their property interests.
The next step is the assessment of the couple’s assets, liabilities and financial resources. The outcome of this will determine what’s known as the ‘asset pool’ or ‘property pool’.
Once this asset pool has been identified and valued, the financial and non-financial contributions of each party will be determined. As part of this process contributions made on entering, during, and following the relationship will be considered.
Examples of ‘contributions’ in this context aren’t purely financial. They might also include things like enhancements made to the home, contributions towards parenting duties, home making duties, renovations, etc.
The court would then consider whether any other adjustments ought to be made in support of a just and equitable outcome. For example, have the actions of one party resulted in a detrimental impact on the value of the asset pool? Examples could include the squandering of funds through habitual gambling, or intentional destruction of an asset.
Whether there is a significant difference in the future needs of the parties will also be considered. The court will look at factors such as age, health, income, available financial resources, capacity for future earnings, and responsibilities relating to the care of dependent children.
The final step in determining how the asset pool is split sees the court examine the ‘practical effect’ of the proposed division on each party. This will help determine whether the adjustments applied are ‘just and equitable’.
Who is entitled to spousal maintenance?
At separation, the circumstances of one spouse may render them unable to financially support themselves, and they may be able to claim spousal maintenance from the other. This would only apply where the other spouse was deemed to have the means to do so, alongside supporting themselves.
Rarely would a court order permanent spousal maintenance. It is usually for a limited amount of time to enable one party to get back on their feet.
But what if a decision cannot be reached by the former couple? As with property matters, there is a window of one year after divorce to apply for associated court orders, without needing special permission from the court. In some cases there may be an exception to this rule, so consult your lawyer to find out where you stand.
If proceedings do reach this stage, decisions about what level of spousal maintenance support is justified, if any, will be made by the court.
Dependent children – entitlements around care, custody and contact
The most important decisions many separating couples will make are likely to focus on the wellbeing of their dependent children. This aspect of a divorce is about more than the entitlements of a parent to have contact with their child. It is equally about the entitlement of a child to maintain healthy relationships with both parents. Decisions may also be needed to protect a child from domestic violence, serious parental incapacity or substance abuse issues.
As with asset division, many divorcing parents can successfully come to an agreement about the future care of their children. The ideal scenario would see parents come together and work out the terms without legal intervention. This would protect the emotional wellbeing of the children involved, and reduce the time taken to achieve a resolution in their best interests.
Of course, there will sadly always be cases where this kind of approach is not possible. Alternative steps are therefore needed. These might include Family Dispute Resolution measures, or parents asking their lawyers to negotiate an arrangement on their behalf.
Where all other steps have been exhausted and an agreement has not been reached, an application to the Federal Circuit and Family Court of Australia is needed. They will take on the role of deciding the best arrangements for everyone.
How are entitlements to child support determined?
Another consideration is around child support payments, which may be required from one party to the other. Again, many parents can reach an agreement on this themselves.
However, in cases where an agreement can’t be reached, the Department of Human Services Child Support can be called on to determine an appropriate level of child support. The financial position and income of each parent will be considered, as well as division of care, and the number of children and their ages.
How can Rayner Song help?
If you have any questions relating to divorce and your entitlements, advice from a family lawyer will place you in a strong position to reach the best outcome.
The team at Rayner Song Family Lawyers is known for effectively handling any divorce scenario with empathy, compassion and understanding.