Clients often ask us, “If the house is in their name, does that mean that I don’t get anything?”
The short answer? Not necessarily. This is because, unlike some other areas of law, family law looks behind the legal ownership of particular assets and liabilities and instead considers the assets and liabilities that each party has (whether held jointly or otherwise) and the contributions that each party made to the assets and liabilities and the relationship as a whole.
Why assets might be in one name only
There are many reasons a home or asset might be held in one party’s name:
They owned it before the relationship
The couple kept finances separate
It was purchased that way for tax or asset protection reasons
But in family law, these reasons don’t necessarily protect an asset from being included in the property pool, or being available for division between a separating couple.
Why legal ownership isn’t everything
In family law, other factors are taken into account when deciding how to divide property, not just ownership.
For example, even if one person legally owns the home, the other person might have made contributions to the home or to the relationship. These contributions might be financial or non-financial. They may have contributed directly to the value of the assets or indirectly. Some common contributions are:
Payment towards the mortgage, bills, or for groceries;
Caring for children while the other person was at work;
Doing housework;
Renovating the home, or
Maintaining the gardens and/or upkeep of the property.
The Court recognises that relationships involve teamwork, and contributions can take many forms.
The Court’s role in property division
After a separation, either party can apply to the Federal Circuit and Family Court of Australia (“the Court”) for a property settlement.
Under the Family Law Act 1975, the Court has the power to alter the legal interests of the parties in the property to be divided if it determines it is just and equitable to do so.
That means the Court can:
Transfer house ownership from one person to another;
Order one person to pay the other a cash sum; and/or
Divide superannuation.
When dividing assets after a separation, the Court looks at everything each person owns or owes, regardless of whose name it’s in. This is known as the “property pool” and includes things like:
Real property and home loans;
Cars;
Investments;
Savings;
Personal loans;
Tax liabilities;
Business or trust interests; and
Superannuation.
In the same way that any asset owned by either party forms part of the property pool, so too does any liability. This means that if one person has a credit card in their sole name, even if the other party doesn’t use it, it may be considered a liability of the relationship.
The bottom line: Does legal title matter?
Well, not as much as you might think.
In family law, the Court looks behind the legal ownership. Whether an asset is in your name, your partner’s name, or held jointly, it may still be included in the pool of property to be divided.
So there may be some truth to the old saying: “What’s mine is yours, and what’s yours is mine.”
It is important to remember that, in addition to looking at what property is there, the Court will look at the contributions of each party (financial and non-financial) and their future circumstances (income, age, health and care of children, among other things) when determining what a just and equitable outcome might be.
Need advice?
If you would like some advice in relation to your legal entitlements following a separation, please get in touch with us.
Contact Robinson + McGuinness to arrange an appointment on (02) 6225 7040, by email on info@rmfamilylaw.com.au or get started now online with one of our experienced lawyers.