Likely Outcomes of a Family Law Property Settlement

3 real Family Law case studies detailing the circumstances, recommended steps to take and outcomes for those going through a Property Settlement / Property Division matter.

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).

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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).

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Case Study Three – Separated married couple, with children and an inheritance

Marriage of 12 years. At the date of cohabitation, neither party had any significant assets or debts. The parties made similar contributions throughout the relationship except for a $500,000 inheritance received by the Husband three (3) years into the marriage which he used to pay towards the home loan. The parties have two (2) children together, with the Wife having taken a year of maternity leave for each child then returning to part time work until the youngest child started school.

At separation, the property pool consists of a house with equity of $1,000,000, the Husband has superannuation of $200,000 and the Wife has superannuation of $50,000.

The parties are both in good health and of a similar age, however, the Husband earns $150,000 per annum while the wife earns $95,000. The Wife has the primary care of the two (2) children who are nine (9) and seven (7) years old.

In this case, the Husband is likely to be entitled to more of the non-superannuation property pool on the basis of his contribution of the $500,000 inheritance he paid to the home loan. However, nine (9) years have passed since this contribution and the Wife has made significant contributions to the welfare of the family, particularly in respect of the two (2) children, plus financial contributions from her earnings. This has had the effect of reducing the impact of the Husband’s contribution of the inheritance on the contributions-based outcome. On the basis of contributions, the net non- superannuation asset pool is divided $600,000 (60%) in favour of the Husband and $400,000 (40%) in favour of the Wife.

In light of her primary care of the children and the disparity between hers and the Husband’s earning capacities, a 5% future needs adjustment is made in favour of the Wife in respect of the non-superannuation assets. This results in a 45% division of non-superannuation assets to the Husband and 55% to the Wife. Therefore, Husband receives $450,000 of the equity in the property and the Wife receives $550,000.

The total pool of superannuation in the sum of $250,000 is divided equally between the parties so that the each receive $125,000. To achieve this, $75,000 of the Husband’s superannuation is transferred to the Wife’s superannuation.

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The information in this article is not legal advice and is intended to provide commentary and general information only. It should not be relied upon or used as a definitive or complete statement of the relevant law. You should obtain formal legal advice specific to your particular circumstance. Liability limited by a scheme approved under Professional Standards Legislation.

Solicitor Director
Family Dispute Resolution Practitioner