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Property Settlement: The Four Step Process

Following the breakdown of a marriage or a de facto relationship, the court will assess each party’s entitlement to the matrimonial assets and liabilities using the below four-step process, in accordance with the Family Law Act 1975 (Cth). It is important to note that the court will first consider whether, in the circumstances, it is just and equitable that there be a property adjustment.


Property Pool

The first step is to identify the value of the matrimonial property pool. This includes all assets, liabilities, superannuation as well as any other financial resources irrespective of whose name they are in.

If you and your former spouse are unable to agree on the value of any of the assets, they must be valued by an expert.



Once the property pool has been ascertained, the court will consider the contributions that each party has made to the relationship. This includes financial and non-financial contributions that occurred at the beginning, throughout and after the relationship.

Please note that:

  • If a party had assets of significantly greater value at the commencement of the relationship, this may warrant an adjustment in that party’s favour, depending on the circumstances.
  • Non-financial contributions can include work around the house, caring for the children or renovations to a property etc.
  • The court considers the roles of breadwinner and primary carer to be weighed evenly in most instances.
  • Assistance by a party’s family with a loan, gift or generally with children or household chores will add to the relevant party’s contributions.
  • Contributions are assessed on a case-by-case basis.


Future Factors

Once contributions have been assessed, the court will consider the position of each party post-separation. That is, will one party be better off than the other financially such that an adjustment should be made. Some of the factors the court will consider are as follows:

  • The age and state of health of each of the parties;
  • The income, property and financial resources of each of the parties and the physical and mental capacity of each of them for appropriate gainful employment;
  • Whether either party has the care or control of a child of the marriage;
  • Commitments of each of the parties that are necessary to enable the party to support:
  • himself or herself;
  • a child or another person that the party has a duty to maintain;
  • The eligibility of either party for a pension, allowance, benefit or superannuation;
  • The duration of the marriage and the extent to which it has affected the earning capacity of the parties;
  • If either party is cohabiting with another person, the financial circumstances relating to the cohabitation;
  • The commitment to child support by either party.


Justice and Equity

Once the court has evaluated the first three steps, it will consider the practical effect of any proposed adjustment. If the court finds this would lead to be unjust outcome to either party, it will make a discretionary adjustment based on what is just and equitable in the circumstances.


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