Dividing assets after a separation or divorce can be one of the most stressful aspects of ending a relationship. Many people wonder, ‘What is a fair split? or ‘How do Australian divorce settlements work?’ The truth is, there is no fixed formula that works for everyone – but there are relevant sections of the Family Law Act and case law that applies.
The Family Law Act sets out a framework for achieving a just and equitable outcome, but the exact outcome depends on various factors, including each party’s financial contributions, non-financial contributions, future needs and overall financial circumstances. There are many myths about a standard ’50/50′ split in a divorce, which is not a legal standard by any means.
The ultimate decision will remain with the couple if they agree to work together, or through lawyers negotiating for them, or the Judge on the day if it ends up in court where the couple can not agree between themselves.
This guide explains how property settlements are assessed, how assets are divided and why outcomes are not ‘average’ – and can sometimes be surprising or out of one party’s control.
What Is A Divorce Settlement In Australia?
Property settlement refers to the legal process by which all the assets and liabilities are divided between one or both parties. Under Australian family law guidelines, the goal is not necessarily a 50/50 split but rather a division based on the unique circumstances of the relationship.
The court considers several factors when dividing assets to achieve financial outcomes, but it’s also worth noting that many people decide on asset division without going to court. This allows them to split assets in a way that works for them and completing a Binding Financial Agreement to legally secure the agreement between them.
Even if both partners contributed equally to the asset pool, an equitable outcome may favour the partner who is financially less stable if they face greater future responsibilities or have a lower future earning capacity.
Why Are Property Settlement Outcomes Rarely ‘Average’?
There is no standard or average outcome in property settlements because relationships and family dynamics are rarely uniform. Just as every relationship and separation is different, so is the financial division. Although some percentage-based splits occur more frequently, which we’ll look at below, each separating couple’s situation is unique, and agreed settlements and the Family Law Act require decisions to reflect the specific circumstances of the parties involved. Factors considered include:
- What each party brought into the relationship, including assets, debts or resources
- The duration of the relationship, the ages of the parties, and whether children are involved all influence the division of property.
- Contributions during the relationship, including financial contributions, such as inheritances and gifts, and non-financial contributions, like caring for the home or children, are taken into account.
- Current and future needs, as well as capacity, are what each party will require now and in the future, taking into account their current and anticipated living expenses, healthcare requirements, earning capacity, retirement planning, and ongoing care responsibilities.
Because these factors vary significantly from one relationship to another, property settlement outcomes are tailored to the circumstances of the parties rather than following a predictable or average formula.
Common Scenarios in De Facto & Divorce Settlements
While many couples assume a 50/50 split, Australian divorce settlements typically vary. Some of the more common splits aside from each party getting half are:
- 60/40 or 55/45: More common when one partner is the primary caregiver and earns less or has received a gift of funds or inheritance during the relationship.
- 70/30: This may occur in exceptional circumstances, such as short relationships, or when young children are involved, or if one party brought in assets, made significant non-financial contributions or career sacrifices, or cannot financially support themselves.
Even similar cases can lead to different outcomes. Factors like hidden assets, assets being sold, undervalued properties, businesses or unforeseen inheritances can influence the final settlement.
Why Is It Difficult To Define An ‘Average’ Split For Divorce Settlements In Australia?
There isn’t a lot of accurate data on family law settlements in Australia, and that is because many family law matters are resolved out of court, and consent order data is generally not made public, meaning that. cases that do run in Court cannot be reported upon. There haven’t been any extensive studies in this area for some years now in Australia, which makes it very hard to give an accurate figure on what the average split is, beyond the most common splits seen by family law firms.
If couples decide to split assets privately or through the use of a binding financial agreement, the outcome will only be known to the parties involved and their legal teams, which again makes it very difficult to average out what is standard or frequently occurs. The other major factor is that two couples who seem to have relatively similar situations during divorce may be assessed quite differently, depending on the case put forward, the accuracy of financial disclosure, and other factors, such as health issues, inheritances, gambling, trusts or self-managed super funds.
This is why legal guidance is imperative during a family law split – to ensure that a fair split occurs.
How Are Assets Divided In Australia?
Property division in Australia can occur through multiple avenues, which can be very straightforward and agreed upon, or end up as long, costly court battles. Here are some of the ways that couples may decide to financially split after divorce or separation.
- Informal agreement – Couples may agree privately on how to divide assets. This is common when joint assets and debts are straightforward. However, without proper documentation, the agreement may not be legally binding, leaving one party exposed to future claims either in the Family Court or Supreme Court upon death.
- Binding financial agreement (BFA) – A legally binding contract drafted by lawyers that specifies how marital assets, debts and financial resources are divided. BFAs can be executed before marriage (prenuptial agreement), during the relationship, or after separation. Both parties need separate lawyers.
- Consent orders – Court-approved agreements that make an informal agreement legally binding. This ensures enforceability and avoids potential disputes. Only one party needs a lawyer – but it’s wise for the second to get legal advice to ensure fairness.
- Property orders made by the court – If one party cannot reach a fair settlement, the court determines how the property pool is divided to achieve a just and equitable outcome.
Whether using a binding financial agreement or consent orders, making arrangements legally binding reduces the risk of disputes. Without formal documentation, informal agreements can be challenged years later. Always seek legal advice to ensure fairness and enforceability before signing anything.
Why Some Separation Splits May Be Unpredictable
Even with careful planning, divorce property settlement outcomes can be unpredictable. This can be for a range of reasons, which we’ll look at below. This is why it’s so important to speak to a Family & Property Lawyer about your situation before making any significant decisions, as there may be many factors you have missed that can significantly impact your financial future. Below are some scenarios that may influence a settlement with your ex-partner that you may not have considered.
Misrepresentation
If either party hides assets or exaggerates contributions, the asset split may be skewed. This can also happen if one party does not have access to or awareness of their partner’s financial resources.
Incorrect Asset Valuations
Investment properties, collectibles or businesses and companies may be worth more or less than anticipated. A formal valuation is necessary.
Hidden Assets or Debt
If either party has not fully disclosed their financial resources, assets may be missed in the property pool, or unexpected amounts of debt may arise during settlement. An example here may be a tax debt, for instance..
Unexpected Life Events
Inheritances, shares, compensation payouts or sudden health issues can change future financial needs.
Court Discretion
The court aims for a just and equitable outcome, and minor differences in presentation or evidence can lead to varied results, even in nearly identical cases.
Legal Representation
If one party has not had quality independent legal advice, they may not be aware of their entitlements or how to present their side, and end up with a lot less than they would otherwise be entitled to.
Steps to Achieve a Fair Settlement
Australian law is complex, and whether your matter is being decided privately or in the Federal Circuit and Family Court of Australia, it’s imperative to gather as much evidence as possible and present your side of the matter in a positive light. This is where a trusted Family Lawyer can be an invaluable source of support.
Seek Legal Advice
Consulting experienced divorce lawyers ensures that your rights are protected, financial resources are well accounted for, and non-financial contributions are valued properly.
Identify & Value All Assets, Liabilities & Resources
Include bank accounts, mortgages, investment properties, personal loans, credit card debt and tax debt, cars, trusts, shares, collections, and any other financial assets or obligations.
Assess Contributions
Direct financial contributions such as gifts and inheritances and non-financial contributions such as home duties and childcare are relevant.
Consider Future Needs
Age, health, earning capacity and responsibilities as a primary caregiver influence future financial needs.
Document Thoroughly
Gather all financial documents and records of financial support, including legal fees incurred, to strengthen your case.
The Possibility Of Unexpected Outcomes
There are also many other factors that may influence a divorce split that may not be expected in a traditional sense of ‘each party takes half’.
- High superannuation, low cash One spouse may appear financially well-off due to superannuation, but lack immediate cash flow. Conversely, the other may lose a share in the family home but gain a significant portion of super, impacting short-term financial stability.
- Undervalued or hidden assets Assets such as investment properties or inherited items may not be fully disclosed, affecting the asset split.
- Compensation payments or insurance settlements Unexpected financial resources can shift the equitable outcome, even if both parties’ contributions were equal.
- Future financial needs are misjudged A primary caregiver may appear to require substantial financial support, but their earning capacity or access to financial assets may reduce actual need, or vice versa. Conversely, a working partner may underestimate future financial obligations, creating a gap between expectation and outcome.
- Business interests When one spouse owns a business, valuation can be unpredictable, potentially affecting the asset pool. Poor or overoptimistic valuations can lead to unexpected splits.
- Impact of domestic or family violence Where domestic violence is a factor, the court may consider how it affected each party’s ability to contribute financially and non-financially to the relationship. It can also influence decisions about parenting arrangements and the overall fairness of the division.
- Unequal access to legal representation When one party cannot access proper legal advice due to financial hardship, control, or other barriers, it can significantly affect the negotiation process. In some cases, the court may intervene to ensure fairness, but outcomes can still be influenced by this imbalance.
Need Help With Divorce Or Separation Settlement?
Separation and divorce can be complex, especially when financial, emotional and practical factors all come into play. A skilled Divorce & Family Lawyer can help ensure your voice is heard, your contributions are recognised, and your future needs are properly considered.
Our team takes the time to understand your circumstances and advocate for a fair, balanced outcome that reflects the bigger picture – not just the numbers.
If you’re facing a property settlement or any other family law matter, contact us today. The team at Pearsons Lawyers will ensure you know where you stand, protect your interests and guide you towards a resolution that truly supports your next chapter. Get in touch today on 1300 699 688 or via our contact form to book a free initial chat about your matter.
