Classifying assets in a separation

After a sep­a­ra­tion, the individual par­ties from a mar­riage or defac­to rela­tion­ship are enti­tled to seek a divi­sion of assets from the rela­tion­ship. This includes all assets held joint­ly or indi­vid­u­al­ly whether they were acquired pri­or, dur­ing or after the rela­tion­ship. Pre-marital assets will be con­sid­ered a con­tri­bu­tion from the per­son who bought it into the rela­tion­ship. It does not mat­ter which part­ner paid for the asset or from where they obtained the funds.

The process of dividing assets is undergone in court, with laws dictating the division on a “just and equitable basis”. The court deter­mines whether there should be a change to the own­er­ship of assets at all, in regards to the cir­cum­stances of the rela­tion­ship. Par­tic­u­lar­ly in the case of short mar­riages, sec­ond mar­riages or if there are over­whelm­ing con­tri­bu­tions by one par­ty with min­i­mal or no con­tri­bu­tions by the oth­er, the court will deter­mine that there should be an alter­ation of prop­er­ty inter­ests, how­ev­er, this is not guar­an­teed. The court may also con­sid­er it appro­pri­ate that the assets remain with the per­son who has own­er­ship or pos­ses­sion at the date of the hearing.

The court will often look at assets as a whole in what is deemed an asset pool. Deter­mining the asset pool is achieved by tak­ing the val­ue of the assets held joint­ly or indi­vid­u­al­ly and deduct­ing the val­ue of lia­bil­i­ties of the par­ties. Usu­al­ly all lia­bil­i­ties are includ­ed but in some cases, cer­tain lia­bil­i­ty can be excluded if the court con­sid­ers it appro­pri­ate in a par­tic­u­lar case. The net val­ue, the assets minus lia­bil­i­ties, is what makes up the asset pool for division.

Once the asset pool is established, the con­tri­bu­tions of both par­ties are con­sid­ered. These are not just monetary contributions, but acts such as who the pri­ma­ry care­giv­er was, who was the pri­ma­ry finan­cial provider, did one par­ty ren­o­vate the prop­er­ty, who did the greater share of the cook­ing, clean­ing, gar­den­ing etc? After accessing these factors, the court will also look at things such as future earn­ing capac­i­ty, health, age and any future car­ing respon­si­bil­i­ties of the par­ties.

The court then looks at the effect the pro­posed orders would have on both par­ties. Con­sid­ering the length of the rela­tion­ship and previous fac­tors out­lined, the court will then deter­mine whether the pro­posed orders are fair, having tak­en into account all of the cir­cum­stances of the rela­tion­ship. Here is where mat­ters such as destruc­tion of prop­er­ty or continual gam­bling are considered.