Investment Property Entitlement
The client is in the process of finalising a divorce and has raised a concern regarding an investment property purchased by their former spouse during their marriage. This property was acquired with the former spouse's own funds, and they primarily serviced the loan. The client is curious about their entitlement to any portion of the property's equity. Both parties have agreed not to pursue each other's superannuation and have settled the division of other assets but are seeking clarity on the specifics of this investment property.
Questions about this case
These answers have been verified by a lawyer in the LEAP networkAm I entitled to a portion of the equity in the investment property purchased by my former spouse during our marriage?
In Victoria, the Family Law Act 1975 covers property settlements, and all assets, including property acquired during a marriage, are generally considered part of the asset pool regardless of whose name they are in or who funded them. Contributions made by each party, both financial and non-financial, are taken into account. Because the investment property was purchased during your marriage, it is likely to be included in the asset pool. The court will consider factors such as your financial and non-financial contributions and your future needs. However, since you've mutually agreed not to pursue each other's superannuation, this agreement may influence the division, but not necessarily exclude the property from the asset pool. For more details on property settlements, refer to the Family Court of Australia website.
How does the court in Victoria typically assess the contributions of each spouse, both financial and non-financial, in a long-term marriage when determining property settlements?
In Victoria, the court evaluates both financial and non-financial contributions when determining property settlements in a long-term marriage. Financial contributions include income, property, and other monetary assets each party brought into the marriage or acquired during it. Non-financial contributions encompass homemaking, raising children, and managing family affairs. The court assesses these contributions in the context of the entire relationship, considering their impact on the marriage and the family's wellbeing. Importantly, the court aims for a fair, not necessarily equal, distribution, taking into account each party's future needs and financial situations. This holistic approach ensures recognition of contributions beyond just monetary input.
What factors will the court consider when deciding if the investment property should be included in the asset pool for division?
In determining whether the investment property should be included in the asset pool for division, the court will consider several factors. These include whether the property was acquired during the marriage and whether it was used for the family's benefit. The court will also evaluate the direct financial contributions made by each party, such as who serviced the loan, and any indirect contributions, such as homemaking or caring for children. The duration of the marriage and the future needs of each party will be assessed. The overarching principle is to achieve a just and equitable division of assets.
Can the agreement we have made about not pursuing each other's superannuation impact the overall property settlement in any way?
Yes, the agreement to not pursue each other's superannuation can impact the overall property settlement. In Victoria, superannuation is considered part of the property pool and can be subject to division. While you both agree to exclude it, the court still needs to ensure that the settlement is just and equitable under the Family Law Act 1975. The court may consider the exclusion when assessing the fairness of the entire settlement. It is advisable to formalise your agreement through consent orders or a binding financial agreement to ensure enforceability.
What steps should I take to ensure that our division of assets, including the investment property, is legally binding and recognised by the court?
To ensure your division of assets is legally binding and recognised by the court in Victoria, you should formalise the agreement through a Binding Financial Agreement (BFA) or obtain consent orders from the Family Court of Australia. A BFA is a private agreement but requires strict compliance with legal formalities, including both parties receiving independent legal advice. Consent orders involve submitting your agreement to the court for approval, ensuring it is fair and equitable. Both methods will protect against future claims. You should also ensure full and frank disclosure of all assets and liabilities to avoid future disputes.
