Divorce Property Settlement Myths


  • Author Phillipa Kingswell
  • Published April 8, 2017
  • Word count 1,090

What are the most common divorce property settlement myths? Many of them are perpetuated by ‘real-life’ stories where the context is not clear or the facts have been manipulated. Many couples get incorrect information from friends about how the Family Law Court works who aren’t themselves sure about what the law actually says. What are some of those property settlement myths?

There were 48,517 divorces granted in Australia in 2015. That’s a lot of people who are affected by family breakup. Divorce is a time of great emotional strain and often physical upheaval. The care of children needs to be worked out, as well as how assets will be divided. This gut-wrenching time is made worse by misinformation. Dispelling some of these property settlement myths can help to ease what is already a difficult time and bring clarity and calm.

Property Settlement Myths: Divorce needs to be finalised before you can divide your assets.

This is not the case. You can start dividing up your property when you both agree to separate. You don’t need to have the divorce papers to do it. In fact, it’s wise to start the negotiation of property division soon after separation. A divorce or property settlement can be agreed upon anytime after separation and you don’t have to have a lawyer to do it for you, although it is a good idea to involve one. Family lawyers know what is a fair settlement and can help guide you through the process, giving you confidence that an outcome is being worked out by a professional with a thorough knowledge of the law. And because a family lawyer knows the law, they’ll include things that you may not even have considered. This is one of the most common property settlement myths.

Property Settlement Myths: You have to go to court for a divorce property settlement.

No. You really don’t.

If you can’t work out a divorce settlement through the help of a lawyer and mediation, then the matter will need to go to court. New research on divorce and relationship breakdown shows a majority of separating or divorcing parents in Australia can divide up property without having to go to court and are reasonably happy with the outcome. The Australian Institute of Family Studies report shows nearly half of parents – 43 per cent – were able to reach agreement on the division of property and assets within a year of ending their relationship. However, when the couple had more wealth to divide the settlement time tends to blow out, with 40 per cent of couples with more than $500,000 in assets taking more than two years to finalise an agreement.

Senior research fellow at the Australian Institute of Family Studies, Dr Rae Aspire, said the study is largely a good news result. The five-year study of 9000 separated parents found the average value of assets at separation is $202,900, including those who had no assets or debts. Dr Aspire said parents across all income levels had generally been able to come to an agreement, with 39 per cent of settlements achieved through discussions and 18.8 per cent "just happening" without specific action. Only 7.1 per cent went to court and 4.2 per cent went to mediation.

Property Settlement Myths: Property that I brought into the marriage is mine to take out of it.

Another of the most common property settlement myths is that if you brought an asset into the relationship, it’s yours to take out of the relationship. The Family Law Courts consider how property is to be divided according to the Family Law Act. When deciding on the property settlement, there are a number of factors to be considered including the length of the relationship, the financial contributions made by both parties, non- financial contributions, the parties’ individual incomes and potential to earn an income, the cost of care for any children of the relationship as well as the health of the parties. It’s not based only on assets contributed.

In a shorter marriage the court may decide that each party can take away what they brought in, but each case is different and there is no set ‘formula’. If the marriage is of a longer duration, then the non-financial contributions of a spouse are more likely to be considered as part of the bigger picture of working out how property is divided fairly.

In a recent UK divorce settlement ruling, a wife who made millions as an energy trader was told by a judge that she could not keep half of her fortune from being awarded to her husband following her divorce just because she was a woman. Julie Sharp, 44, offered him £1.2m, which she said would cover his needs. Instead the judge ruled that he should receive £2,737,000, half of the couple’s "matrimonial pot". Her lawyers say that dividing her assets equally with her ex-husband was unfair because they had had a "short, childless, dual career marriage."

Property Settlement Myths: It’s my spouse’s fault that we’re getting divorce so they will get less.

Australia has a ‘no-fault’ divorce law. Adultery and desertion are not ‘punished’ by the court through a divorce property settlement. The reason for the divorce is irrelevant in the eyes of the court. Only if the behaviour is at all relevant to the fair settlement of assets will the court take it into account. If one of the parties squanders marital assets through gambling or destruction of property then this is called ‘asset dissipation’. This is where one party intentionally squanders or uses up marital assets. The court is likely to make an adjustment in favour of the other party in the case of asset dissipation.

Property Settlement Myths: The settlement will be 50/50.

There is no set rule about how assets will be divided. It may be that the court decides for the settlement to be 50/50 or that a separated couple come to their own agreement for this, but there is not a rule that determines this needs to be so. A couple may decide on a 65/35 split if one has the children living with them for the majority of the time and their capacity for earning is less. Each case is different. Some of the factors that will be taken into account about how to divide the property include:

The length of the de-facto or marriage relationship;

The financial contributions of each person;

The non-financial contributions of each person; and

The current and future needs of each person (including any minor children who need to be considered).

Phillipa is an experienced solicitor and accredited as a family law specialist by the Queensland Law Society. She brings sixteen years experience in the law with her, and has been practicing in family law exclusively for ten years. In 2011, Phillipa earned the title of Accredited Specialist in Family Law (Qld).



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