Splitting the spoils in times of separation

Going in on a house together is a sweet relationship milestone but it can quickly turn bitter in the unfortunate event of a separation.

While none of us have a crystal ball to know what the future holds, if you end up needing to sell your not-so dream home with an ex, it could literally pay to be in the know.

When it comes to properties and separation, there are two recurring questions HHG Legal Executive Chairman Simon Creek said he was asked about – de facto relationships and superannuation.

“De facto relationships and their property settlements are nearly identical to a marriage, though this was not the case in years gone by,” he said.

Secondly, any property bought through selfmanaged superannuation funds – while not carved up the same as other real estate – is still included in the overall pool of marital assets.

Mr Creek said a prenuptial agreement – or in modern parlance, binding financial agreement (BFA) – can be make or break, for both your heart and your wallet.

“BFAs are not the cheapest document to get done, but they are worth their weight in gold,” he said. “If parties are agreeing while amicable, you have a much better chance of keeping them out of court if they separate.”

As the name suggests, BFAs are binding but can be overturned by the courts if they are poorly drafted and will lead to a grossly disadvantageous outcome for one party.

On the division of marital assets, there are four major steps people should be aware of, with the first determining the net asset pool available for division and the second being an assessment of each party’s contributions throughout the relationship.

Contributions are not just financial – they can also be time invested to build the joint wealth of the household, such as partners who give up career opportunities to support the breadwinner by raising kids or running the home.

Mr Creek said the third step was looking at everyone’s future needs to see whether there is a significant difference.

“If one party in a lengthy relationship is clearly going to be much worse off than the other over time, the percentage division can be adjusted to compensate,” he said.

“When a range of entitlements by percentage has been calculated, the fourth step is where each legal team has to estimate whether it justifies what I explain to clients as the ‘sniff test’ to see if a last adjustment is required to ensure the final division is just and equitable.

“If they have the same facts, which gets tested in negotiations, two competent lawyers will come up with much the same advice.”

In the extremely rare circumstance a separation goes to trial, usually three years or more after proceedings commenced, the law gives Family Court judges broad discretion to apply their individual judgement as to what is just and equitable, as the final stage in determining a division of assets.

This can make the costly act of going to trial much riskier than settling out of court, unless your lawyer is confident there is a genuine case to be made and good reasons to fight for a better settlement than any offered in negotiations and mediation.

Once this has been resolved, the value of the property must be looked at.

“Most parties get two or three appraisals each and agree on the average price,” Mr Creek said.

“But if they can’t agree as to what it’s worth, there’s a system for both lawyers to jointly instruct one valuer to value the property.

“The clients either accept what the valuer comes back with, or within 21 days, raise questions with the valuer in writing.”

As it appeared in the 2025 April 26 edition of The West Australian.