The 4 steps courts use to divide up your world

At Divorce Planning we’ve taken a careful look at the four steps courts use to divide up the assets, financial resources, debts and liabilities between the parties in a Property Settlement Application.

These four steps are exactly the same every time, and are what we base our mediation process on.

Step 1 – Establish the asset pool

  • What assets and financial resources do you have and what is the value if each item?
  • What do you owe and what is the amount owing for each liability?

Step 2 – What contribution has each party made to the asset pool?

This is the direct financial contribution made by each party and may include wages, pensions, lump sum payments, compensation payments, windfalls, gifts, inheritances received, initial assets and money brought into the relationship.

The pool will also include the non-financial contributions made by each party, including things like renovation work around the home, making items like curtains, parenting and homemaking, as well as the contributions made by each party since separation.

Step 3 – Consider the future needs of each party

The court will look at range of things set out in Section 75(2) of the Family Law Act, including:

  • Each party’s age
  • The state of each party’s health
  • The property and financial resources of each party
  • Eligibility for a pension, allowance or benefit
  • Whether the party is responsible for the care or support of children
  • The commitments of each of the parties that are necessary to enable them to support themselves and a child, or another person that they have a duty to maintain
  • The need to protect a party who wishes to contribute that party’s role as a parent
  • The responsibilities of either party to support any other person
  • A standard of living that in all the circumstances is reasonable
  • The effect of any proposed order on the ability of a creditor of a party to recover the creditor’s debt, so far as that effect is relevant
  • Income, as well as income earning capacity (including the physical and mental capacity of each party for gainful employment)
  • The financial circumstances of any new de facto relationship
  • The terms of any Financial Agreement that is binding on the parties
  • Any child support assessed as payable or which might be assessed as payable in the future
  • Any fact or circumstance that the Justice of the case requires to be taken into account

Step 4 – The practical effect of the order the court proposes

The court is required to assess whether what has been proposed is “just and equitable”. In broad terms “just and equitable” means a fair and even distribution of the assets, liabilities and financial resources. In other words, the court tries to achieve a fair outcome.

It is during this step that the court decides who will retain the specific assets, financial resources and liabilities that a couple has accumulated during their life together.


At Divorce Planning we can help you achieve all of this without ever setting foot in a courtroom or a lawyer’s office.

We work hard to minimise the adversarial nature of divorce and remove the intimidating elements, to provide you with a fair outcome that will set you up to confidently tackle the next phase of your life.

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