When considering property settlements, the court must consider whether it is in the circumstances fair and reasonable. It will also consider the value it shall ascribe to the non-financial contributions of a party such as home making and child rearing. In making this determination the court will consider initial contributions, joint contributions to assets purchased during marriage and whether the asset values have increased or declined.
Global Approach vs an Asset by Asset approach
The Family Court can consider whether to take a global approach or an asset by asset approach. A global approach considers the entitlement of each party to a proportion of the total assets whilst the asset-by-asset approach determines the parties’ interest in each asset. With the passing of time the Family Court has view initial contributions as diminishing over time and being incorporated into the joint assets. This is commonly referred to as the erosion principle.
What is a short or long marriage?
A marriage of approximately 5 years duration will generally be considered a short marriage whilst a marriage greater than 10 years will generally be considered a long marriage. The court in both cases must initially determine the property pool of the marriage. To do this each party must declare to the other and to the court the assets in their possession and what they consider as joint assets. The court must consider the contributions of each party considering the specific circumstances or the relationship. The court will also consider the future needs and change in life style that may be brought about by the division of property.
Short marriage property settlement
In a relatively short marriage where the parties have kept their assets separate from each other, where there is no change in lifestyle and each is able to maintain their life styles and there are no children of the marriage, the court will generally consider the division of property on an asset-by-asset basis. As such because of the shortness of the marriage the court will consider that initial contributions have not had the time to erode. In general, the capital gains of a property asset is not to be considered income of the parties, whilst a loss of value not incurred recklessly, negligently or wantonly will be accounted in the light of the circumstances.
It should be noted that unless a Binding Financial Agreement is in place no party is able to quarantine an asset from the consideration of the court. It is my opinion where parties are entering relationships later in life with significant assets to is highly important to implement a Binding Financial Agreement to clarify the position in the event of an unforeseen breakdown in the relationship.
In summary, for a marriage for around 5 years duration the court will usually place greater importance upon initial contributions, the contributions of the parties to assets acquired during the relationship whilst looking at the non-financial contribution to a lesser extent.
I hope this is of assistance and if either you or anyone you know has any questions please do not hesitate in contacting me.