The five-step process to guide a just and equitable property settlement

Published by Alysa Bucknall

The breakdown of a relationship can be an emotional and stressful time for the whole family. It’s important to know your rights and what you might be entitled to if the relationship is at an end.

When assessing how much of your “property pool” you and your former spouse might each be entitled to, the following five-step process is undertaken. 

Step 1 – Justice and equity

From the outset, it is necessary to establish that it is just and equitable to adjust the parties’ interests in property held by either party to the relationship. In almost all cases, this can be established. 

Step 2 – Identify and value the property available for division 

This step involves identifying and valuing all assets and liabilities owned/held by you and your former spouse together, individually or with other people. This is known as the “property pool”. The property pool can include (but is not limited to): real property; motor vehicles; cash at bank and shares; chattels such as household furniture and contents; superannuation entitlements; any interests in trusts, companies or partnerships; loans; credit card liabilities; and tax liabilities. 

Ideally, you and your former spouse would reach an agreement about the value of the assets and liabilities; however, if those valued cannot be agreed upon then the ordinary course would be to engage an expert valuer to value the items in dispute.

Step 3 – Consider the contributions made by each party

At step 3, we need to consider the direct and indirect, financial and non-financial contributions made by and on behalf of each of you, including contributions in the role of the homemaker and parent. We also consider each of your financial positions at the commencement of your relationship, and what you each contributed to the relationship at that time. It is at this stage that consideration is given to any inheritances or gifts received during the relationship. 

After considering all of the contributions, we make a percentage apportionment reflecting those contributions (for example, 50% / 50% for equal contributions by both parties).

Step 4 – “Future needs” factors

This step involves considering a number of factors to determine whether the percentage split reached at step 3 should be adjusted, to account for the “future needs” of both parties. This includes (but is not limited to) considering: the age and health of each party; each of your income earning capacity and any disparity in income; and whether either party has care of the children. For example, if one party were to have the full time care of the children, then this may warrant an increase in the percentage split of the property pool in their favour. 

Step 5 – Overall “justice and equity”

Finally, we need to consider if the proposed percentage split and property division is “just and equitable” in all the circumstances of the particular case. This includes considering how a percentage division is effected and what it means in practical terms.

If you require advice with respect to property settlement following separation (or are considering separation and would like advice as to what you may be entitled to), please contact us.



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