Considering Contributions during Property Settlement
When sorting through the details of property division after separation, it pays to understand a little about what the courts generally see as a ‘fair’ split. Once a court decides that it is just and equitable to make a property order, it then takes account of the couple’s existing assets and liabilities.
After the size of this property pool is established, the next question is – what was each person’s contribution to the property in question?
Working it out
Establishing contributions is a crucial stage of the property division, and can cause some tension between separating couples when agreement can’t be reached. Working out contributions accurately is necessary after the break-up of both married and de facto partnerships.
By ‘property’ we don’t simply mean land, houses and the like. Assets such as shares, savings, jewellery and vehicles are just some of the other types of property that can be counted in the matrimonial pool. So how do we work out who contributed what to the remaining net assets?
There are three main types of contribution that will be considered:
- Direct financial contributions
- Indirect financial contributions; and
- Non-financial contributions
Direct financial contributions
In many ways, direct financial contributions are those tangible financial additions made to the matrimonial asset pool.
The purchase of a block of land, the expense of building a house, the costs contributed to maintenance or improvement of the property – these all represent classic forms of direct financial contribution.
Indirect financial contributions
While not as direct as purchasing real estate for example, indirect financial contributions will be considered as part of the process of dividing property.
For example, one party might pay the bills associated with an investment property, while the other covered mortgage payments on the family home. Rates and body corporate fees are other examples of indirect contributions, as are gifts and inheritances that might have been received.
These might not represent the big ticket items seen in direct contributions, but indirect financial contributions are certainly considered to be a viable part of maintaining or improving matrimonial assets. If you have any doubts regarding your particular indirect financial contributions, an expert family lawyer can certainly assist.
Financial contributions can in most cases be easy to account for. Receipts, account information and deeds can all easily help us to work out what has been financially contributed across time.
But what about less-obvious contributions made by partners? Non-financial contributions can include the labour and effort involved in marriage-related tasks, such as home-making, child-raising and elder care – just as examples.
Courts have acknowledged that the acquisition and care of property during the marriage can depend significantly on the non-financial inputs of spouses. In fact it is recognised that one partner might not have been able to work if these other significant tasks weren’t undertaken on the home front.
What about my particular situation?
Understandably, many parties to a property settlement don’t want their circumstances to be given a ‘one size fits all’ approach. In some cases, an extremely short marriage, different places of residence, substantial pre-marriage assets, and unusual payment arrangements and the like will call for closer analysis. Your family lawyer can help you sort through these types of scenario.
Having said that, in many cases, the contributions made by parties in a more traditional marriage situation – for example the husband does paid work, wife stays home to care for house and children – will be assumed to be equal, at least as a starting point for dividing property.
The court will from time to time assess contributions differently, but this discretion will only be exercised on a careful, case-by-case basis.
The bigger picture
During the emotional times of a marriage break down, it can sometimes be tempting to minimise the contributions made by your spouse: “He should have worked harder”, “She sat around the house all day”, “He never paid the bills on time” or “She always got her mum to babysit anyway” are just some of the thoughts that family lawyers hear when clients discuss contested contributions.
At the end of the day however, it can sometimes be better to take a broad view of who contributed what.
Particularly across years of up and down feelings, co-habitation, work, kids, property acquisition and caring for assets – a good starting point might be to acknowledge that a variety of contributions were made, both financial and non-financial.
Unfortunately if issues of contribution become too detailed or contested, a court might well have to make a property order that ends up being much less than one or the other party had anticipated.
Finding what’s fair
As with all aspects of post-separation arrangements, working out respective contributions during the marriage can take time. To make sure that property-related contributions are fairly assessed, have a chat with a specialised family law practitioner early in the piece.