When Dividing property the Four-Step Process Applies
The Family Law Act sets out the four-step process guiding us on how to divide property when a marriage or de-facto relationship breaks down. If any, property adjustment is required between parties following separation is referred to as a four-step process. Put simply, the four-step process provides for an analysis of the following:
- THE PROPERTY POOL – What assets, liabilities and financial resources there are of each party, joint or separate (the “net property pool”);
- THE CONTRIBUTIONS – What each party has contributed to those assets, liabilities and financial resources before the commencement of cohabitation, during the relationship and post-separation, and financially, non-financially and as parent and homemaker (in percentage form);
- THE FUTURE NEEDS – What the ‘needs’ of each party will be moving forward post-separation (resulting in a percentage adjustment from point 2 above); and
- THE JUSTICE & EQUITY – Whether the assessment at points 2 and 3 above, and the transactions that will allow for that assessment to be implemented, are just and equitable for both parties.
Even if you are not yet in Court proceedings when you divide property you will be guided by the above principles. It will enable you to appropriately conduct negotiations and it will ensure that if you wish to formalise an agreement by way of Consent Orders, the Court will be likely to approve the Orders you are seeking for your agreed property division.