Property and divorce - facts you should know

Date: Sep 05, 2011

When it comes to divorce, many people are unaware of how their assets may be affected.

Friends and family may offer conflicting advice on the various methods used to determine the distribution of wealth in the event of a separation.

The truth is that a majority of these people - while obviously meaning well - are unlikely to be qualified to offer this sort of information.

Individuals who need advice on the division of property would do well to gain advice from an experienced divorce lawyer.

A financial settlement is undertaken to divide the assets and liabilities of a former couple - including property, debts and superannuation.

The first step should be to work out a balance sheet. The total value of all real and personal property needs to be disclosed by both parties so an accurate measure can be made, before any other proceedings are undertaken.

Assets owned fully, jointly or in partnership with external parties are included in this process, as are the various liabilities and debts owed by the separated partners.

From here, the total net value of the couple's assets can be calculated, forming the base amount for property division.

Once these amounts have been determined, the parties are then able to begin the process of evaluating their effective contributions to the property pool.

Individuals should be aware that this is not a purely financial exercise and does not simply require the mathematical dissection of funds used in the acquisition of assets.

When determining the level of contribution that each party has provided, it is important to understand the role that the history of the partners' property plays in this process.

Firstly, each party needs to provide a history of the assets owned - who brought what to the relationship initially.

From there, both the financial and non-financial contributions to further property acquisition are considered when determining the percentages owed to each partner.

Applications for additional percentages are also considered - however the criteria for these claims are thoroughly dependent on the circumstances surrounding a separation.

The final stage in the process is the division of the assets. In some cases, property can be divided simply by transferring the ownership from one party to another in an arrangement that both partners may find to be beneficial.

If this is not the case, divorce financial settlements can require the sale of the assets in question, with the resulting funds divided according to the previously determined percentages.