Clients are often mystified as to the calculation of a just and equitable division of property between parties to a marriage, de facto or same sex relationship.

For decades, there has been a misconception amongst the public that at the end of a relationship, each party is automatically entitled to 50% of the property pool. This is simply not the case.

In fact, the calculating of what a person’s “just and equitable” entitlement is can be a long and arduous road.

Prior to judgment of the High Court of Australia of Stanford v Stanford in November 2012, the courts in family law matters adopted a four step process in a property settlement application.

It seems now that any court in considering an application for division of matrimonial or defacto property must first determine the legal and equitable interests of the parties then determine whether it would be just and equitable to make an order altering those interests.

If at this first new step the court assumes that it would be just and equitable to divide property then the old four step process would be considered as follows:

1. Identification and valuation of the property pool
Identify the net pool of assets (including superannuation) of the relationship – whether they are in your name, your spouse’s name, or joint names.

2. Assessment of the contributions of the parties
Identify the contributions, both financial and non financial, made by each party to the relationship, and also take into account any indirect contributions in a financial and non financial way. Direct financial contributions will be by way of earnings, and indirect contributions will be by family or friends and may include financial contributions, i.e. gifts in that regard, and non financial contributions by family and friends will be by way of assistance they may provide, e.g. constructing fence, carport, stairs. The parties to a de facto/marriage relationship would expect that ultimately assets will be divided in accordance with the assessed percentage of contributions.

3. Adjustments for future factors
At this point the court will consider whether the assessed contributions at step 2 need to be adjusted by giving further weight to any future needs aspects including age, state of health, or earning capacity, and obligation by one party to care for the child (if any) of the relationship. Contributions financially throughout the relationship/contributions in relation to homemaking responsibilities and caring for children will also be considered.

4. Assessment of justice and equity
At this point the court will consider whether the proposed apportionment identified at step 3 will meet the overruling obligation to divide the assets on a just and equitable basis. If the court is not satisfied that the proposed apportionment will meet the just and equitable requirement the assessment will be reviewed.

Things to be mindful of when separating

1. You should amalgamate all superannuation funds into one fund, and ensure that you have removed your former spouse as a beneficiary by contacting the trustee of your superannuation fund/s.

2. Similarly you should arrange for the company of any life insurance that you may have to remove your former spouse as beneficiary and consider including a new beneficiary.

3. Arrange to make a new Will and Enduring Power of Attorney.

4. Arrange to remove any access that your former spouse may have to any bank accounts including home loan accounts, credit card accounts, term deposits etc.