Property settlement and short relationships
A property settlement is a common occurrence in family law; however, the outcome of each property settlement is never the same. Numerous factors are considered when the Court is deciding what would be a fair, just and equitable outcome for the parties.
Some matters involve parties who have been married or in a de facto relationship for decades. Some involve matters where the parties have only been married or in a de facto relationship for a few years. These cases are generally known as short relationships or short marriages.
In this article we look at the factors that are considered by the Court when handling property settlements for short relationships.
What is a short relationship?
The terms ‘short marriage’ or ‘short relationship’ are not defined in the Family Law Act. Generally, a short relationship will be one that does not exceed 5 years.
When determining whether the marriage is a short marriage it is also relevant to consider whether the parties cohabited in a de facto relationship prior to marriage. That means if the parties were only married for two years but lived together for 20 years, they would not be considered to have had a short marriage.
What does a Court consider for a short relationship?
There are no different rules in the Family Law Act for determining how to divide property in a short relationship. The Court is still required to consider the contributions of the parties along with their future needs.
When there is a short relationship, the Court may take a closer examination of the financial contributions of each party to the acquisition, maintenance, and improvement of assets.
The assets that the parties each brought into the relationship, known as the initial financial contributions, will also be heavily examined. Especially in circumstances where those assets have not changed significantly during the relationship.
In short relationship where the initial financial contributions of one party were significant and continue to form most of the pool, the Court may be persuaded to return each party to the same position they were in prior to marriage.
How is the property pool determined for a short relationship?
In all property settlements, each party are obligated to provide a full and frank financial disclosure. This is to establish the parties' property pool.
The parties will also need to provide details of their financial and non-financial contributions. Financial contributions include wages, government payments, gifts and inheritances. Non-financial contributions can include homemaker duties and caring for the children of the relationship. This information is relevant to each party's entitlement to the property pool.
In some cases, the Court may decide to exclude the initial contributions from the asset pool, or the Court may be inclined to consider the non-financial contributions to be equally as valuable as financial contributions if they were particularly difficult to maintain. The Court will determine whether to include these contributions depending on facts specifically relevant to the matter at hand.
How will the Court divide the property pool?
There are two methods of division: -
An asset-by-asset approach. This means that the Court will establish separate property pools for assets, liabilities and superannuation. The contributions made by the parties to each of the property pools will then determine how each pool will be divided.
A global approach. This means that all assets, liabilities and superannuation are included in the one pool.
Based on each party’s contributions, the Court will consider how to divide the property pool in such a way that ensures the outcome is fair, just and equitable for each party.
It is important to understand that there is no quick and easy rule for how property settlements are determined for any relationship, including short relationships, as each relationship is unique.
Please note: the information in this article is general in nature and is not legal advice. For specific advice about your circumstances, contact us to make an appointment with one of our solicitors.