70/30 divorce settlements Australia: We separate fact from fiction

Going through a property settlement can be a challenging and emotional process, especially when deciding how to divide assets fairly. It’s important to remember that no two situations are the same and the split ratio may vary based on the specific circumstances. 

By Aaron Wallis, Lawyer at Roger Fritz LLP – Canberra. 

In this article, we break down the reality of the 70/30 divorce settlement in Australia during the divorce process, based on our professional legal experience and know-how. Keep reading to learn more.

What is a 70/30 divorce settlement?

70/30 refers to one separated party getting 70% and the other getting 30% of the property pool. The “property pool” is all the assets and liabilities of the parties to the relationship.

You may have heard about 70/30 divorce or property settlements in Australia – or even been told that it’s a common outcome. In reality, however, such a significant distribution to one party does not happen often. Each property settlement depends on its own circumstances with no presumptions or of specific divisions, be they 70/30 or 50/50 divisions or something else. 

When considering whether to make consent orders or determining a matter at Final Hearing, Courts go through the “four-step” process to divide property:

1. Determining the property pool;
2. Assessing each party’s contributions to the property pool;
3. Considering any specific factors that may impact the parties’ future earning capacity and circumstances; and
4. Considering a Just and Equitable outcome based on the above and any other relevant consideration

Keep reading for a breakdown of each of these steps.

Identifying the property pool

The first step is to identify and value all assets and financial resources involved in the property settlement. This includes everything you both currently own, as well as any assets or debts acquired before the relationship or after separation. It’s important to understand that all assets and liabilities are considered in the property pool, whether it’s:

• real estate;
• vehicles;
• cash;
• household items;
• motor vehicles
• shares; or 
• Superannuation.

The Court also considers debts such as:

• home loans;
• car loans; and 
• credit cards.

These are all included with their value at the date of hearing or the date of agreement being reached, rather than the date of separation.

For example, if you win the lotto after separation, the winnings in your account are ordinarily included in the pool. However, you can make a case about whether/how these should be considered or divided.

The financial resources of the parties are also considered and may include things that are harder to place an exact value on, for example: 

• inheritance; 
• interests in business ventures or trusts.

2. Assessing contributions

The second step is assessing the “contributions” made by each party towards the property pool. These are actions that affect the accumulation of the assets and liabilities of the property pool or the family’s welfare. These include financial and non-financial, direct and indirect contributions. 

For example:

• Making home loan payments is a direct financial contribution. 
• The care of Financial Institutions by a party is a direct non-financial contribution. 
• Contributions from family members, such as guaranteeing a loan, may be an indirect contribution. 

The law around contributions is intentionally flexible.

The Court may consider each party’s contributions at the start of, during and after the relationship. However, the Court may decide the overall contributions were equal, especially in long relationships. The Court does not place any special weight on financial or non-financial contributions and often balances these equally.

The Court also considers the extent to which the parties agreed to the contributions that were occurring during the relationship, and may consider that even though these were unbalanced, they were agreed to without any control or duress. 

This is something that is not commonly understood when “70/30 property settlements” and “50/50 property settlements” are mentioned. Just because one party earned more, and paid more of the expenses, does not automatically mean that they get the mathematical share they contributed to the property. It is not a ‘dollar-for-dollar’ exercise.

3. Section 75(2) factors

The third step is assessing the ‘section 75(2)’ factors, commonly called ‘future needs.’ This is to consider each party’s ability to support themselves moving forward. 

Factors include: 

• each party’s age
• state of health, 
• income-earning capacity, 
• financial resources, 
• care of Financial Institutions; and 
• financial circumstances. 

The Court may make an adjustment to the contribution-based entitlements based on these factors.

For example, suppose one party will have primary care of young Financial Institutions after separation, and has a lower-income earning capacity. In that case, the Court may make an adjustment in their favour because of those factors.

4. Just and Equitable

The fourth step is to consider whether the particular outcome from the above three stages is just and equitable and whether any other factors need to be considered. The property pool size may be a consideration here. It is important not only to consider the percentage split but how to achieve it.

See also our articles on limitation periods,  and the stamp duty exemptions and potential capital gains rollovers for transfers of property by Family Law Orders.

A final word

Navigating property division in family law can be complex. Every situation is unique. Your individual circumstances are extremely important and will play a key role in determining any settlement. We’re here to help you to better understand your potential entitlements and work with you to find a resolution that is right for you and your unique situation.

Have more questions on 70/30 divorce settlements in Australia? Our skilled family lawyers can provide you with expert advice to guide you through this process. Time limits can apply, so we recommend you contact us without delay.