After a separation occurs, whether this be a relationship breakup or divorce, both parties can choose to together arrive at a property settlement solution.
To do this, parties may engage in a Binding Financial Agreement, or Consent Orders issued by a Court which form a binding agreement which is mutually consented to.
However, should these options not be possible, matters may be taken to the Family Court who will then make a determination on how the accumulated asset pool is apportioned. In this instance, the Court is bound by the Family Law Act 1975, and will conduct a 4-step process.
What are future needs considerations in family law?
The 4-step process
To help the Family Court arrive at a final judgement, a 4-step process is used:
Ascertain the total asset pool.
Assess the contributions made by each party, both financial and non-financial.
Assess the future needs of both parties. To do this, the Court will consider the following future needs considerations:
- Financial resources, income and property
- The mental and physical capacity to be gainfully employed
- The need to be the primary carer for a child and/or children of the relationship or marriage
- Commitments necessary for each party to care for themselves, a child or another person that is under their care
- The ability to access a government allowance or pension
- The capacity to continue with the current lifestyle
- The capacity to retrain or start a business
- The duration of the relationship and the affect that it has had on the earning capacity of either party
- The financial status of any new person a party may be cohabiting with
- Existing child support commitments
- The terms and conditions of any financial agreement that is binding on the parties
- Any other factor that the Court considers relevant
These considerations are concisely laid out in section 75 (2) of the Act.
It should be noted that apart from caring for children from the relationship or marriage – children being under the age of 18 – one or both parties may also be responsible for caring for other children from previous relationships too. Similarly, either party may also hold the duty of care for others, including an elderly relative or friend. It should also be noted that age and state of health are considered only as far as their effect on earning capacity and future self-reliance.
The Family Court will treat each set of circumstances on an individual merit, as each case will differ enormously. Therefore, although there may be a general assumption of a 50:50 starting point, the future needs of both parties will be firmly considered.
The 4th and final step within the 4-part process examines what is considered reasonable. Overall, the Family Court seeks to arrive at a complete determination which is reasonable to both parties, which can be reached by asking whether the end result is just and equitable to all persons involved.
Further reading: 5 Surprising facts about dividing assets after separation.