A property settlement is an arrangement which is made between separating parties when dividing assets, liabilities and financial resources. There are five steps that the Court considers when parties are contemplating a property settlement. Those steps involve the following:
Step 1 – Just and Equitable
The first step requires the Court to be satisfied that it is just and equitable to make an alteration of to the property interests of the parties. If the Court is satisfied that an alteration of property interests is just and equitable, the next step will be considered.
Step 2 - Identifying the Assets Available for Property Division
The second step involves the process of the Court identifying the existing legal and equitable interests of the parties in the property settlement. Ordinarily, the Court will consider all current assets, liabilities and financial resources of each party, whether held jointly or separately and a net asset pool of the relationship will be determined by the Court for property division.
Step 3 – Determining the Parties’ Contribution-Based Entitlements
The third step involves an assessment being made by the Court in relation to the various contributions of each party to the relationship. The Court will consider the following contributions of the parties:
1. Direct and Indirect financial contributions (such as income, property or
inheritance) made by or on behalf of a party to the relationship or a child to
the acquisition, conservation or improvement of any of the property of the
parties of the relationship.
2. The contribution (other than a financial contribution) made directly or
indirectly (such as performing housework or doing unpaid work for the family
business) by or on behalf of a party to the relationship or a child to the
acquisition, conservation or improvement of any of the property of the parties
of the relationship.
3. The contribution made by the party to the relationship to the welfare of the
family (such as any contribution made in the capacity of homemaker or
parent).
The Court will assess the contributions of the parties on a case-by-case basis and in doing this, the Court will determine what each party’s contribution-based entitlements are at law.
Step 4 – Identifying the Future Needs of Each Party
Once the Court has determined the parties’ contribution-based entitlements, the next step requires an assessment to be carried out to identify the future needs of each party, which may warrant an adjustment being made in favour of one of the parties to assist them to continue post-separation duties. In determining this step, the Court will consider factors such as the age and health of the parties, their income and future earning capacity, caretaking responsibilities, and the duration of the relationship or marriage.
The Court will assess the future needs of the parties on a case-by-case basis.
Step 5 - Contemplation of the proposed settlement’s practical effect.
The final step involves the Court examining whether it is ‘just and equitable’ to make the proposed distribution and property division, upon consideration of the long-term effects of this on each party.
After following the 5-step process, the Court will determine the property division of assets and liabilities between the parties.
Should you require any legal advice or assistance in your family law matter, please do not hesitate to contact Ters Legal.
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