When a relationship breaks down, one of the first big questions is usually: what happens to the house, the savings, the car, and any debts? Under Australian family law, shared assets — and even those in just one person’s name — can be divided.
But contrary to what many believe, there’s no automatic 50/50 split. The law uses a clear four-step process to reach a fair outcome. Getting your head around this early matters because the choices you make in those first few weeks can shape your finances for years.
Dealing with property settlement is rarely straightforward. Many people get expert help to manage it. Let’s go through exactly how shared assets are divided after separation.
Define “Shared Assets” Broadly
Most people think “shared assets” means the family home or the joint bank account. Legally, the definition is far wider. Under the Family Law Act 1975, all assets, liabilities, and financial resources owned by either party—or both—form the “asset pool.”
This includes:
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Real estate (the family home, investment properties);
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Superannuation (often the second-largest asset);
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Bank accounts, shares, and cryptocurrencies;
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Motor vehicles, boats, and caravans;
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Business interests and trusts;
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Debts: mortgages, credit cards, personal loans, tax liabilities;
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Assets acquired before the relationship, by inheritance, or even after separation.
A common mistake is assuming that because a car or investment property is in your sole name, it is protected. It is not. The law draws all assets into the pool for assessment, regardless of whose name appears on the title.
The Four-Step Legal Framework
So, how does a court (or a negotiated agreement) decide who gets what? The process follows a strict four-step sequence, which applies to both married couples and de facto partners in NSW and across Australia.
Step 1: Identify and Value the Entire Asset Pool
This forms the basis of everything that follows. Both you and your former partner must make a full financial disclosure — it’s a legal duty.
Everything needs to be listed: assets, liabilities, superannuation, business interests, and even frequent flyer points. Significant assets like property or businesses will usually require independent valuations.
Getting this wrong by hiding information can be costly. Courts can reopen the case later or make the non-disclosing party cover the other’s legal expenses.
Step 2: Assess Contributions
Next, after valuing the full asset pool, the court assesses each person’s contributions — financial and otherwise.
This involves:
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Financial contributions: Earnings, inheritances, pre-relationship assets, and gifts.
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Non-financial contributions: Homemaking, child-rearing, unpaid business support, and home maintenance.
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Parenting contributions: Looking after the kids, which receives real weight, especially if it affects income potential.
One important rule is that both financial and non-financial contributions are valued equally. The law fully recognises the role of a stay-at-home parent. Courts may also adjust the assessment if there was family violence, based on the Kennon v Kennon case.
Step 3: Consider Future Needs
After contributions are assessed, the court looks forward. It adjusts the division to account for any factors that would make an otherwise equal split unfair going forward. These “future needs” factors include:
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Age and health of each party;
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Income-earning capacity (a significant disparity can lead to an adjustment);
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Who will have primary care of the children after separation;
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Financial resources, such as a new partner’s income;
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The need to support a child or a disabled adult.
For example, if one party earns $200,000 per year and the other has been out of the workforce for 10 years raising children, the lower earner will likely receive a larger share of the asset pool to compensate for their reduced future earning capacity.
Step 4: Is the Outcome “Just and Equitable”?
Lastly, the court has to step back and ask itself whether the suggested division is fair as a whole.
The 2012 Stanford v Stanford High Court decision made this a meaningful legal test, not just a quick check. If the numbers — say 55/45 — don’t seem just and equitable in light of the couple’s situation, the court can say no. This final review makes sure that no standard 50/50 split is ever applied blindly.
What About Assets You Bought Before the Relationship or Inherited?
Anything you owned before the relationship — such as property, shares, or an inheritance — doesn’t automatically remain yours after separation. These get included in the total asset pool right at the start.
The outcome hinges on the length of the marriage and how the assets were used. In short relationships, you might get them back separately. In long marriages of 15 years or more, they’re often treated as fully shared.
This also applies to inheritances. Keeping $100,000 in its own account is helpful, yet it’s still part of the pool — though the court may lean in your favour and give it extra recognition.
How Does the Process End?
When you and your ex settle on a division (or the court orders one), it has to be properly formalised. Here are the three main ways:
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Consent Orders — You submit the agreement to the Federal Circuit and Family Court. Once approved, it has the force of a court order. Most couples choose this option.
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Binding Financial Agreement — A private legal contract that requires independent advice for both sides.
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Court Order — If agreement isn’t possible, a judge decides everything in court. This is the most drawn-out and costly method.
Keep an eye on the deadlines. Married couples must apply within 12 months of their divorce being finalised. De facto couples have 2 years from the date of separation. Running late can make things much harder and more expensive.
Conclusion
Don’t assume shared assets will just be cut in half after a breakup. The law uses a detailed four-step approach that takes into account both partners’ contributions and their future financial needs.
It doesn’t matter if the asset pool is modest or includes businesses and trusts — the same process applies. Getting early legal advice, ensuring full disclosure, and staying away from handshake deals are the most important steps you can take to protect yourself.