Likely Outcomes of a Family Law Property Settlement

Case Study One – Separated married couple with children

Marriage of 25 years with a property pool of approximately $4 million plus superannuation of $1 million. Each party has made equal contributions to the property pool and therefore the contributions-based division of the property pool at this point is 50/50, with each party entitled to $2 million plus superannuation of $500,000. Throughout the marriage the Husband has built a significant earning capacity as an Executive and earns $450,000 per year, while the Wife gave up her career to care for the children and has a very limited ability to re-enter the workforce. If she were able to secure employment, her earning capacity is limited to approximately $45,000 per year.

In this case, the contributions-based division of the non-superannuation property pool is likely to be adjusted in the Wife’s favour by 5-10% to account for the disparity in the parties’ respective earning capacities. Superannuation is not adjusted for the Wife’s future needs as it is anticipated that the parties will have similar needs in relation to superannuation once they reach preservation age. Therefore, the Wife is entitled to 60% ($2.4 million) of the non-superannuation assets and 50% ($250,000) of the superannuation. The Husband is entitled to 40% ($1.6 million) of the non-superannuation assets and 50% of the superannuation ($250,000).

Case Study Two – De facto separated couple with one Partner owning a Property

De facto relationship of four (4) years. At the date of cohabitation, the de facto Wife owned a house with equity of $200,000 and superannuation of $50,000, while the de facto Husband owned only superannuation of $80,000. Throughout the relationship, the parties lived in the Wife’s house and each party worked and combined their income ($65,000 per year earned by the de facto Wife and $150,000 per year earned by the de facto Husband). The de facto Husband paid all living expenses so that the de facto Wife could make additional home loan repayments.

Due to market forces, the de facto Wife’s house increases in value by $600,000, so that the equity in the property at the time of separation is $800,000 including the home loan repayments made throughout the relationship. The de facto Wife’s superannuation has increased to $75,000 and the de facto Husband’s superannuation has increased to $120,000.

In this case, the non-superannuation assets (property equity of $800,000) are likely to be divided $500,000 (62.5%) to the de facto Wife and $300,000 (38.5%) to the de facto Husband on the basis that the de facto Wife is returned to the financial position she was at the start of the relationship and the increase in equity by market forces is shared equally between the parties. In relation to superannuation, each party is likely to retain their own superannuation ($75,000 (38.5%) to the de facto Wife and $120,000 (61.5%) to the de facto Husband).