In the first part of our Property Settlement Process article we discussed how we determine the net asset pool so that everyone involved has a clear picture of what needs to be divided between the parties.
In part two of this article we will talk about determining the value of the contributions made by each party to the relationship.
Contributions can be considered at various times during the relationship. For example:
- initial contributions made by each person at the start of the relationship
- contributions made during the relationship
- contributions made after the relationship has broken down that continue to benefit both parties, such as making mortgage repayments, paying rent or paying for children’s school fees
The types of contributions considered in a property settlement largely fit within the following four categories:
- Financial contributions. Being income earned and profit from businesses, investment returns and more particularly inheritances and gifts of money or property from one party’s family
- Non-financial contributions. This involves contributions which may add value but are not a direct contribution of money. A common example is the time spent renovating or repairing a jointly owned property to increase its value.
- Parenting contributions. The effort made by each spouse, particularly where one had primary responsibility for parenting, while the other was free to earn the major part of the income in the relationship, is an important part of balancing the contribution between parties.
- Homemaker contributions. While the full-time homemaker is less common in modern Australia we will still look carefully at a relationship to determine the value of the contribution each party has made to domestic duties such as cleaning, cooking, garden maintenance, grocery shopping and the like.
Only when the net asset pool has been determined, the contributions to that pool by each party have been assessed and each party’s future needs are considered, can the next step in the property settlement process occur. This next step includes a determination or agreement (usually in percentage terms, though not necessarily) as to what proportion of the asset pool each party will receive and applying that percentage to divide the asset pool. This is the area we will cover in Part Three of our Property Settlement Process article.
If you have any questions about the property settlement process for yourself or in relation to a client you are advising, please contact a member of our family law team for more information.