Are you getting divorced? One of the major concerns amongst the parties getting a divorce is property settlement. Who gets what? Contrary to popular belief, the property won't be divided on a 50/50 rule, and usually there's no rule of the thumb on what each party should receive. Nevertheless, there's a process that is used to determine what each party will get as a result of separation or divorce. It is usually recommended that you have lawyers to guide you through the process, but it's important to have an idea of what to expect. Here is an overview of the 3-step process.
Step 1: The Present (Identification of the Assets, Liabilities and Superannuation Interests Forming the Property Pool)
A balance sheet of all the assets and liabilities of the parties, including superannuation interests, is required. This is done regardless of whether the superannuation interest, asset or liability is in the name of both parties, is in the name of only one of the parties or is held jointly with third parties. Everything has to be placed in a property pool. Transparency is vital at this stage because the net pool from which allocation will be made has to be determined. Therefore, the full and honest disclosure of the financial position of each party, including valuations and appraisals is required.
Step 2: The Past (Assessment of Each Party's Contribution to the Relationship)
After the property pool has been determined, an assessment of the contributions of each party throughout the marriage will be conducted. This contribution is usually in relation to the property pool. Keep in mind, however, that the contributions can be both direct and indirect, financial and non-financial. Examples include one party buying a property (direct), one party receiving gifts from their family members (indirect), earning an income (financial) or being a parent/homemaker (non-financial). Assessments are made in terms of valuing the contributions. Adjustments can be made where necessary, such as when one party brought more into the relationship financially or in the case of gifts or inheritance.
Step 3: The Future (Assessment of the Future Financial Needs or Responsibilities of Each Party)
The assessment of the future financial needs of the parties will take into account elements such as their health, their earning capacity, their age and the ongoing care of the children. In a case where children are involved, the allowances made for parenting responsibilities will often depend on factors such as the age and number of the children and whether they require any special needs.