Entitlements for non-working parents in a property settlement

Non working parents property settlement

When it comes to divorce, if you’re a non-working parent you might have concerns about what sort of entitlements you could expect, given that non-working parents are often not contributing financially to the household.

However, it’s important to remember that the family Court will consider both financial and non-financial contributions when working out fair entitlements when a couple separates.

Ella Hickman from Hickman Family Lawyers in Perth has put together what you need to know about entitlements for non-working parents in a property settlement in Australia.

Further reading: Super and divorce: Here’s what you need to know.

Working Out Entitlements in a Divorce

Separating couples should be encouraged to reach an amicable property settlement to suit their needs without having to go to Family Court. Sometimes that is not possible and going to Court becomes unavoidable.

There are three main things the Courts consider when working out entitlements in a divorce:

  • Property settlement
  • Spousal maintenance
  • Child support (although this is mainly regulated by the Child Support Agency)

Each issue has its own complexities usually requiring professional legal and financial advice in order to reach a fair, just, and hopefully amicable settlement.

The Property Settlement Process

Property is defined as all assets and debts owned by the couple, regardless of in whose names they are registered. These may include, the family home, various other properties, cash on hand, bank accounts, businesses, investments, vehicles, superannuation and all debt such as mortgage, personal loans, and credit card.

Australian Family Law usually applies a five-step process in the splitting of assets and liabilities as part of a property settlement.

  • Decide whether there should be a property settlement in the first place
  • Identify and evaluate the entire property pool
  • Assess all financial and non-financial contributions made by each spouse
  • Consider the future needs of each person, and establish whether one spouse should get an adjustment of the asset pool in their favour
  • Ensure that the overall property settlement is just and equitable

It is important to note that the Courts consider parenting and homemaker contributions and non-financial contributions, to be equally important as the financial contributions.

Parenting and homemaker contributions include raising and caring for children and looking after the home (for example, things like cooking, cleaning and washing). Non-financial contributions are things like home renovations that have increased the value of the property, all of which have allowed the other spouse to work and earn money to care for the family.

For the adjustment process, the Courts will consider (amongst other things) who is responsible for the primary care of the children, and if there is a disparity in current or potential earning capacity between the two parties. This adjustment process is often what “benefits” a non-working parent more, as the Court may give an adjustment in recognition that the non-working parent has been out of the workforce for a long time, will find it hard to work full time (or work at all) while they care for the children, and will not be able to support themselves as well as the working parent.

Child Support Entitlements

Under Australian Family Law, both parents are responsible for the financial support of their children to provide them a reasonable lifestyle. Child support expenses are managed by the Child Support Agency.

When calculating child support entitlements to the parent caring for the children, certain criteria are usually considered. These will often include:

  • The age and costs of the children
  • The income of both parents
  • The earning capacity of both parents
  • The time each parent may spend with the children

Spousal Maintenance Entitlements

It may come as a surprise that in a divorce, both partners are legally obliged to support each other as far as reasonably possible, no matter what circumstances led to the divorce. That however, may not automatically entitle one to spousal maintenance, as certain criteria still need to be met. This can be an extremely complicated affair and professional legal and financial advice is strongly recommended.

If one partner is unable to sustain themselves within reason, and the other partner has the income capacity to pay spousal maintenance, the Court may consider an application for spousal maintenance.

Often, a non-working parent, who has perhaps been the homemaker and main child carer at home, may find themselves unable to easily find employment and earn a living, especially if they have been away from the workforce for a long period of time. Such circumstances will often make them eligible to apply for spousal maintenance as part of their divorce settlement process.

There is no set formula to calculate the amount of spousal maintenance one could expect, as each case is different. However, in simple terms, if your ex is the main earner in the household, and you can demonstrate a need, the Court will assess your ex’s capacity to pay you spousal maintenance to assist with your living expenses.

If the couple cannot reach an agreement on the amount of spousal maintenance to be paid on their own, both parties will need to present a detailed budget of all their incomes and living expenses to the Court, for a Judge or Magistrate to make a final decision.

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Ella Hickman

About the author

Ella Hickman is the owner and Principal of Hickman Family Lawyers, one of the leading family lawyers in Perth. She practices almost exclusively in family law in Perth and has a particular interest in parenting and children’s issues, matters arising from domestic violence in relationships, and property settlement cases.

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