I contributed more, so shouldn’t I get more in my financial settlement?
When couples separate and commence negotiations on how to divide their asset pool, they may make the assumption that if one party contributed more, they would get more in the financial settlement. This is not necessarily the case as there are many factors taken into consideration regarding contributions and future needs. Therefore, it is essential you obtain legal advice to assess your unique circumstances.
So why wouldn’t I get more?
I earned more - You may have been the primary financial earner whilst your partner stayed at home as the primary carer, or worked in a lower paid job or was doing full time study. As a family, you decided on what role each party would play whether it be a financial provider or primary carer of the children. All financial and non-financial contributions made during the relationship may be considered equal contributions if you had children together.
I had more assets when we met – At the onset of cohabitation, you may have brought assets into the relationship that benefited the family either through selling your assets to purchase the family home or ongoing financial resources such as investment dividends or rental income. You may have bought and sold new family homes over the years whereby your initial assets value in a separation may have diluted over time. Conversely, if your relationship was only for a short number of years your legal advice may deem that your initial property brought into the relationship may have an adjustment made in your favour in your financial settlement outcome.
The assets are in my name – Just because the assets are in your own name doesn’t mean you will get to keep those assets post financial settlement. If your family home is in your name only, the asset may still be classified a marital asset, especially if you have children together. If you both brought assets into the relationship in your own names and independently funded their ongoing mortgages, repairs and expenses, you may both decide to keep your own assets in your financial settlement but future needs may impact the outcome.
I got a lump sum payout – During the relationship or even post separation you may have received a lump sum of money as a monetary gift from someone, an injury payout or an inheritance. Depending on how long ago it was received and how it was used is taken into consideration during legal advice. If the lump sum payment was put into joint funds and benefited the family to pay off the mortgage, family holidays, renovations or upgrading to a bigger home versus being retained for sole use such as purchasing a new car, solo holidays, or any purchases that only benefited you will be assessed at your legal consultation on how that may affect your financial settlement.
Contributions can have a % adjustment to your financial settlement BUT they can be outweighed by future needs of the parties.
What future needs can impact the outcome of the financial settlement?
There are many future needs that will be considered during your legal consultation regarding your family’s unique situation which may provide adjustments in the financial property settlement;
Earning capacity - One party may have been the primary carer taking care of the children for a number of years and therefore not had the same opportunity to gain qualifications or work experience to earn to their full potential like the party that has built a career, had promotions and created financial security for themselves.
Income disparity – Each party may be working full time but their income is vastly different whereby one party may be earning 2-3 times more than the other party. The party with the greater income can rebuild their life post separation much faster than the one on a lower income. Think of it like a marathon whereby each runner has a different starting position on the track to ensure they have a fair chance at reaching the end at the same time. The one with a lower income may be given a % adjustment in their favour to help them build their financial security as they may not be able to save for a deposit for a home as quickly or have borrowing power to get a mortgage.
Work Stability – One party may have a permanent job with secure income whilst the other party may only have casual work where working hours or pay may vary on a weekly basis. The party with casual work may be provided an adjustment in their favour to give them extra financial security.
Superannuation disparity - The party who was the primary financial provider may have generated a significantly larger superannuation than the other party whereby the other party may not have had the opportunity to acquire a similar superannuation nest egg for their retirement. Parties may split their super to share some or all of their superannuation in their financial settlement.
Domestic violence – If there has been a history of domestic violence where one party has been prevented from being able to work through coercive control, isolated in a remote location with limited work opportunities or prevented from acquiring qualifications may have an adjustment made to the financial settlement to give them a head start in obtaining financial security. Spousal maintenance may be recommended by the lawyer to enable the vulnerable party to become financially independent and acquire qualifications and work experience.
Nearing retirement – One party may be nearing retirement age coming to the end of their working life with their income ceasing, whereby the other party may have a number of years left to work to support themselves financially.
Health conditions – There may be health conditions that either party may have that impacts the earning capacity of either party to provide a secure income. The health condition may reduce someone’s working life or significantly impact their ability to work full time, reducing their opportunity for financial security.
Dependents - Looking after people who are dependent on you for care may impact your capacity to work longer hours or accept a promotion as may not provide the flexibility needed to look after young children, elderly parents, sick or special needs children who rely on you for their day to day care.
Impending Inheritance – One of you may have an inheritance pending that will provide you with a lump sum payout imminently which will be considered when assessing future needs. This doesn’t mean that having elderly parents that are currently healthy and one day you will be receiving an inheritance, it is if your elderly parent or relative is terminally ill or has recently passed away whereby you are named as a beneficiary to their estate.
So, when you think about what you might receive as a financial settlement, it is important to have legal advice to have all your contributions at the beginning, during and post separation assessed along with what both parties’ future needs are. There are so many factors that your lawyer has to consider providing you with an estimated outcome you may achieve if your matter went to court.
Avoid going down the legal pathway to reach financial settlement with lawyers negotiating on your behalf, as this can become adversarial, determining a winner and a loser which is very costly both financially and emotionally.
Simple Separation offers a fixed fee service to help you reach your agreement through mediation and legal advice to work together not against each other to reach a financial settlement based on your family’s needs.
Author – Cheryl Duffy, Family Dispute Resolution Practitioner, Simple Separation