Sunday, 21 March 2010

Kids and property settlement

I have been asked whether where children live can make a difference to property settlement, and does it mean that property settlement cannot be dealt with until the kids matter has been sorted out.

The answer to both questions is a big "maybe".

The answer lies in section 75(2) of the Family Law Act, for married couples, and the equivalent provisions for de facto couples (those outside SA and WA and separating from 1 March last year) of section 90SF(3) of the Family Law Act.

Just to recap, there is a four stage process of property settlement:

  1. Identify and value the pool
  2. Assess financial and non-financial contributions
  3. Consider, and if necessary adjust for future factors under section 75(2) or section 90SF(3)
  4. Come up with a just and equitable result
Why in general terms arrangements for children need to be sorted out first before property settlement is contained in section 75(2) (and section 90SF(3). Here are the relevant factors under section 75(2) (equivalents under section 90SF(3)):

(b) the income, property and financial resources of each of the parties and the physical and mental capacity of each of them for appropriate gainful employment; 

[Comment: If a party has full time care of young children the party may have very little capacity for appropriate gainful employment.]

(c) whether either party has the care or control of a child of the marriage who has not attained the age of 18 years
[Comment: The younger the child, generally the more impact on section 75(2) components. For example, the care arrangements for an 18 month child may have a much bigger impact than for a 17 year old.]

(d) commitments of each of the parties that are necessary to enable the party to support:

(i) himself or herself; and
(ii) a child or another person that the party has a duty to maintain
[Comment: Again, generally younger kids equal higher adjustment. However, every case is different, as the Family and Federal Magistrates Court keep emphasising. A child who is going to an expensive private secondary school might result in a significant adjustment.]

(e) the responsibilities of either party to support any other person;

(g) where the parties have separated or divorced, a standard of living that in all the circumstances is reasonable;

(k) the duration of the marriage and the extent to which it has affected the earning capacity of the party whose maintenance is under consideration;

(l) the need to protect a party who wishes to continue that party's role as a parent;

(na) any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage;
[Comment: Child support may vary depending on the care arrangements. Substantial child support payments may impact on what adjustment there might otherwise be under section 75(2).]

The care arrangements for children can make a big difference to property settlement. Property settlement might not be able to be determined until the children's matter is sorted out. If going to court about children's proceedings, substantial costs might be saved to tack property proceedings onto the end of those proceedings, rather than have a separate fight and increasing costs as a result. Each case is different.

WARNING: Time limits apply to property settlements and spousal maintenance- 1 year from date of divorce for married couples, and 2 years from date of separation for de facto couples. After that time, leave (or permission from the court) is required to commence proceedings- and is not automatically given. If in doubt, get advice from an accredited family law specialist, like me.

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