Going through a divorce is already difficult enough, let alone deciding how to divide up combined assets. There is no particular formula for the division of assets. Rather, the Court will undergo several steps and investigate various factors when dividing assets during a divorce.
It is not necessary for a property settlement to go through court. However, many separating couples are unable to reach an agreement regarding the division of their assets. This is understandable since financial separations can be complex and final decisions will impact all members of the family now and in the future.
Understanding family court considerations when dividing assets during divorce is the first step to making educated decisions regarding property settlement.
In this article we explain what those considerations are, whether the matter is settled in or out of court.
REACHING A DECISION OUTSIDE THE FAMILY COURT
Couples do not have to go through the Court to determine the division of their assets if they can come to a mutual agreement themselves which they will both abide by.
To do this, a couple can decide to:
- Sit down together in an informal setting and agree on the division of their assets
- Work with an accountant who will consider tax implications when dividing assets
- Engage with a financial planner who will help split the assets in a way which reduces losses due to the liquidation of valuable assets
- Hire individual attorneys to represent each individual and their interests when in mediation
FAMILY COURT HELP WHEN DIVIDING ASSETS DURING DIVORCE
Should none of these methods work, a couple can seek assistance from the Court. Couples entering this process should understand that there is no specific formula for the division of assets, and the assets are not always equally split between both parties. Rather, the Court will make decisions based on each case.
To begin this process, both parties should openly identify all of their assets, both prior to and throughout the marriage. This may include each individual’s income or earning capacity, savings accounts, real property, personal property, the value of vehicles, insurance policies, retirement or superannuation accounts, owned or invested in businesses, and independent investments.
The court will consider various factors when dividing a couple’s identified assets, including:
- Each person’s earning potential
- The non-monetary contributions made by each individual, which includes homemaking and childcare contributions
- Financial contributions, which includes investments or monies from a trust fund
- Ongoing childcare and education for any involved children of the marriage
- Involved children’s extracurricular activities, which includes music, sports, art and any other clubs which children of the marriage are participating in
- The medical needs and costs of both parties and their involved children
- Any debts that either spouse may have which need to be settled from the asset pool
- The sale of any real property that may be available for distribution between both parties
- The value of any past bonuses, along with the possibility of parties receiving future bonuses
- Assets of a jointly owned business
- Any extraordinary contributions/gifts which were made to the marriage by one partner or a partner’s family, including any inheritances
- Individually held property and assets prior to the marriage (however, the longer the marriage lasted, the lesser the emphasis placed on previous separate ownership)
- The future needs of each spouse, with a focus on the individual who will be the primary caretaker of any involved children, and the lesser financially able individual
As outlined, the Court will consider many factors when dividing the financial assets of a couple who are undergoing a divorce. It should be noted that the couple may not have a significant influence over which factors the Court believes are most or least important.
For this reason, it is recommended that a couple try to work together before seeking the assistance of the Court, as they will have more control and endure more flexibility when determining the division of their assets.
Conclusion: Court considerations when dividing assets during divorce
Dividing assets during a divorce can be a complex and emotionally charged process. However, understanding the court considerations can help both parties reach a fair and equitable settlement.
While dividing assets may be challenging, a clear understanding of the legal framework can help couples navigate the process more efficiently and achieve a more satisfactory outcome.
It is essential for those going through a divorce to work with experienced legal professionals who can guide them through this process and help them achieve a settlement that is both fair and equitable.