Is Separation Just a 50/50 Split?

Many Australians assume that after the break down of a long relationship, the assets of the relationship are simply split down the middle – half to one and half to the other.

While this may have been the case a long time ago, in most instances a straight 50-50 split may result in an outcome that is unfair to one of the parties.

There are several factors the Court take into account when deciding a percentage split between the parties.

Addressing them all would make for an extremely long article, but in short, the Court will apply a four-stage process:

Identify and value all of the property of the relationship, taking into account liabilities and financial resources as of the date of the hearing.
Identify and assess contributions made by both parties throughout the relationship, and determine the contributions as a percentage of the net value of the property.
Assess the party’s future needs, and then adjusts the percentage split from step 2 above accordingly.
Finally, consider all the existing findings and make adjustments as necessary to ensure that the outcome is just and equitable.

So, Is Separation Just a 50/50 Split?

A 50-50 split is generally used as the starting point – however, it can be adjusted according to the above factors.

For example, take the couple who (when they met) have very few assets and started their relationship with basically nothing.

As the relationship develops, the couple decides to have children. The mother stays at home to raise the three children while the father continues to work in his, by now, very well-paid job. There is no need for the mother to work.

When the children are aged between 9 and 13, the relationship breaks down. The parents decide the children will live predominantly with the mother and spend time with the father regularly but not 50:50.

How does the Court look at this scenario and decide how the assets of the relationship ought to be divided between the parties?

Using the four-step approach above, the Court will look at the following factors after identifying and valuing the assets and liabilities and financial resources of the parties:

Relationship Contributions

1. Who Made the Greater Financial Contributions?

In this case, the father because he worked whilst the mother stayed home to raise the children.

2. Who Made the Greater Non-financial Contributions?

In this case, the mother because she was a stay-at-home mum raising the children and performing most of the parenting and homemaking duties.

Future Needs

1. Current Income

The mother will have to rely on government benefits and/or child support from the father, whilst the father will continue to work in his high earning job.

The Court will look at the fact that the mother has not worked for the previous 13 years before having the children and therefore her prospects of earning an income anywhere near that of the father are rather limited.

2. Children

Given that the children will be living with the mother most of the time, she will need more support to continue to support the children.

3. Financial Resources

For this scenario, we will assume that neither the mother nor the father has any other financial resources.

4. Other Factors

Other factors to be considered are the age difference between the mother and the father as well as health.

If one of the parties is significantly older then provision may need to be made for the older person who may not have many working years left.

Also, if one of the parties is suffering from major health issues, then provision may need to be made for that person as their health issues may affect their ability to work.

In the above scenario, a Court may decide that it is just and equitable to split the asset pool on a 55:45 or 60:40 basis in favour of the mother.