Family Law Property Settlement - Plain English Example

If you've just separated, there's a good chance one question is keeping you up at night: what happens to the house, the super, the savings — and how much of it is mine? You want the specifics in plain language and not the generic advice that's hard to understand.

It's a fair question! Let us walk you through how a property settlement actually works in Australia, using a made-up couple to show you the specifics from start to finish. By the end, hopefully you'll understand a lot more about how the Court builds the asset pool and how it decides who gets what.

Meet Sam and Natalie

Sam and Natalie were married for 15 years before separating. They have two kids, aged 10 and 12, who'll be living mainly with Natalie. Sam's an engineer on $160,000 a year. Natalie worked part-time as a teacher's aide while raising the children and running the household, and she's currently earning $48,000 a year..

Working out the asset pool

Firstly, the Court needs a complete picture of what the couple has. That means every asset and every debt, valued at what it's worth today, not what it cost or what it was worth on the day they separated.

A few points trip people up here.

Whose name something is in doesn't matter. If the share portfolio is Sam's on paper, it still goes in the pool. Debts incurred during the relationship come off the total, so the Court is working with the net figure, not the headline value of the assets. And superannuation counts as property too — it goes straight into the pool alongside the house and the bank accounts, even though it cannot be touched until retirement.

Both Sam and Natalie also have a legal duty to lay all their cards on the table and disclose to each other all their assets and liabilities. Trying to hide an asset almost always backfires; the Court can take non-disclosure into account when it decides the final orders, and judges have long memories for people who weren't straight with them.

Here's their pool in our example:

Item	Owner	Value
Family home (Parramatta)	Joint	$1,450,000
Mortgage	Joint	–$520,000
Sam's car	Sam	$35,000
Natalie's car	Natalie	$18,000
Joint savings	Joint	$42,000
Sam's shares	Sam	$65,000
Credit card	Sam	–$12,000
Household contents	Joint	$20,000
Sam's superannuation	Sam	$410,000
Natalie's superannuation	Natalie	$92,000
Total net asset pool		$1,600,000

So there's $1.6 million to divide, once you net off the mortgage and the credit card.

Should anything be adjusted at all?

The next question sounds odd, but it matters: is it actually fair to change who owns what?

After a 15-year marriage with kids and thoroughly tangled finances, the answer for Sam and Natalie is an easy yes. This question really only bites in short relationships, or where a couple genuinely kept their money separate the whole way through. For most long relationships, the Court moves on quickly.

What did each person contribute?

Now the Court looks backwards. What did each of them put in — not just at the start, but throughout, and even after separation?

Contributions aren't only about money. Yes, the Court counts income, the deposit on the house, an inheritance, a gift from a parent. But it gives just as much weight to the contributions that never show up on a payslip: raising the children, running the home, renovating the place on weekends.

This is where Natalie's role matters. Sam earned more, no question. But Natalie stepping back from her career to raise their kids is exactly what allowed Sam to work full-time and build that $410,000 in super. The law treats her homemaking and parenting as a contribution of real substance, not a footnote. Sam did bring about $80,000 in savings into the relationship 15 years ago, which counts in his favour — though after a decade and a half of building everything together, that early head start matters far less than it would in a short marriage.

Weigh it all up and you land at roughly 50/50 on contributions. So far, so even.

What does each person need going forward?

Equal contributions don't mean an equal split. This is the part most people don't expect.

Having sorted out the past, the Court now looks at the future. Who's going to be financially stronger in five years, and who's going to struggle? It weighs things like each person's age and health, their income and ability to earn, who's caring for the children day to day, and whether either of them blew money in a way that hurt the pool — think serious gambling losses or reckless spending.

For Sam and Natalie, the future looks lopsided. Natalie will have the children most of the time for the next six to eight years. She earns less than a third of what Sam does, and her earning power took a hit from years out of full-time work. On top of that, Sam's super is more than four times the size of hers, so he's far better placed for retirement.

All of that points one way. A court would likely adjust the division by at least around 10% in Natalie's favour to reflect where she's headed financially.

Putting it together: who gets what?

Start with the 50/50 on contributions, add the 10% adjustment for Natalie's future needs, and you arrive at a 60/40 split of the $1.6 million pool — $960,000 to Natalie and $640,000 to Sam.

But here's the bit that surprises people: the super gets split too, in the same proportion.

It would be easy to assume Sam simply keeps "his" super and Natalie keeps hers. The problem is that this would leave Sam sitting on $410,000 in retirement savings while Natalie has $92,000 — nowhere near 60/40. So the Court will usually order a superannuation split to make the percentages line up across both the everyday assets and the retirement savings.

Component	Natalie (60%)	Sam (40%)
Non-super assets ($1,098,000)	$658,800	$439,200
Superannuation ($502,000)	$301,200	$200,800
Total ($1,600,000)	$960,000	$640,000

To get the super to 60/40, the Court makes a splitting order moving $209,200 out of Sam's fund and into Natalie's. That brings her super up to $301,200 and his down to $200,800. It's a paper transfer between funds — neither of them sees the cash now — but it evens out their retirement positions.

Then there's the rest of the pool to sort out. The Court doesn't sell everything and write two cheques; it works out who keeps what. Here's one way it could land:

Item	Natalie	Sam
Family home, less mortgage ($930,000 net)	$930,000	—
Cars	$18,000	$35,000
Joint savings	—	$42,000
Sam's shares	—	$65,000
Credit card	—	–$12,000
Household contents	$10,000	$10,000
Cash adjustment (Natalie pays Sam)	–$299,200	$299,200
Non-super subtotal	$658,800	$439,200
Super after splitting order	$301,200	$200,800
Total	$960,000	$640,000

This is where reality bites. For Natalie to keep the house, she'd have to refinance the mortgage and pay Sam roughly $299,200 to balance things out. On a $48,000 income, a bank simply isn't going to lend her that. So in a lot of cases like this, the practical answer is that the family home gets sold, the mortgage is paid off, and the net proceeds are divided so each of them walks away with their share.

That's an uncomfortable truth, but it's better to know it early than to fight to keep a house you can't afford to refinance.

Once the numbers and the practical arrangements stack up, the Court asks itself one last question — is this fair overall? — and if the answer's yes, it makes the orders.

A quick recap

If you take anything away from this, it should be the following:

Everything goes in the pool, including super and debts, at today's values. Looking after the kids and the home counts every bit as much as bringing home a wage. The split gets adjusted for the future, not just the past. There's no automatic 50/50. And the vast majority of separating couples settle without a judge ever getting involved.

Talk to an experienced Sydney family lawyer

Every separation is different, and a small change in the facts can move the numbers a long way. If you want a clear, honest read on where you stand — without the jargon — our family law team is here to help.

Surge Legal has offices in Sydney CBD, Parramatta and Lindfield. Get in touch to arrange a confidential consultation.

This article is general information, not legal advice, and the example is entirely fictitious. For advice about your own situation, speak with one of our family lawyers.