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The first step in a property settlement

Once it has been determined that it is just and equitable for there to be a property adjustment between the parties to a separation, the first step of any property settlement matter is to determine the ‘net property pool’ of the parties. This entails identifying and valuing the assets, liabilities, and financial resources of the parties. It is at this time when clients often ask what is considered property.

Section 4 of the Family Law Act 1975 (Cth) (‘FLA’) defines ‘property’ as: ‘… property to which those parties are, or that party is, as the case my be, entitled, whether in possession or reversion’.

In the case of Mullane v Mullane (1983), an interest in property was defined as a right of a proprietary nature and not a mere personal right. In the case of Marlowe-Dawson & Dawson (No 2), the Court held that ‘property’ must be ‘legally capable of ownership; and have a value not personal to the individual’. The Court went on to say that income itself cannot constitute property for the purpose of the FLA. 

To this end, it has been held by the Court that the following does not constitute property:

  • Non-transferable licenses or rights which are not wholly or partly assignable;
  • Expected inheritance from a living testator;
  • A capacity to borrow money;
  • Money held in a bank account in trust for a child; and
  • Future employment bonus payments.

It is important to remember that whilst the above may not be considered property, the Judge ultimately has the discretion to include or not include items of property in the overall distribution of the property pool, depending on the individual circumstances of each matter.

Our family lawyers are regularly consulted as to what constitutes property and what does not. If you would like to enquire as to whether your property would be included in property settlement proceedings, or discuss your property matter in general, please contact one of our team at Richardson Murray 07 5619 5933.


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