What You Need to Know About 70/30 Divorce Settlement in Australia

What Does a 70/30 Divorce Settlement Mean?   

A 50/50, 60/40 or 70/30 divorce settlement in Australia simply refers to the way assets are distributed between the partners going through a divorce. While each case is unique, the more significant portion usually goes to the financially disadvantaged partner.  

To determine a fair settlement, the Australian court follows a four-step process to ensure a fair outcome, considering past contributions and future needs:  

• Step 1: Identify the property pool value.  
• Step 2: Assess the contributions of each party.  
• Step 3: Consider future needs.   
• Step 4: Ensure a just and equitable distribution.  

However, navigating through these steps requires professional guidance. There are many ways you can achieve a better outcome, such as simply consulting a family lawyer to understand your rights and options.  

The 4 Steps Leading to a 70/30 Divorce Settlement  in Australia

A 70/30 divorce settlement arises when specific factors justify a more uneven distribution of assets. This process involves several critical steps to ensure a fair and legally sound division.  

Step 1: Identifying the Marital Property Pool  

The first essential step in any divorce settlement process is identifying the total value of the property pool. This involves a thorough assessment of all assets, liabilities, and financial resources, including real estate, bank accounts, investments, debts, and superannuation.  

Establishing this comprehensive financial picture is crucial, as it allows the court to understand the full scope of the couple’s financial circumstances and make an informed division of assets.  

Legal Insight: The accurate valuation of assets, particularly complex assets like businesses, investment properties, or retirement funds, often requires professional valuation services to ensure all values are fair and up-to-date, avoiding disputes later in the process.  

Step 2: Evaluating Financial and Non-Financial Contributions  

Once the property pool is defined, the court evaluates each spouse’s financial and non-financial contributions to the relationship.  

• Financial Contributions – Financial contributions include income, savings, and any assets either spouse brought into the marriage. Courts may weigh these more heavily if one spouse significantly outearned the other, allowing them to acquire more assets.  
• Non-Financial Contributions – The court also considers non-financial contributions, such as homemaking, child-rearing, and family care. Contributions like these are essential to the relationship and the family unit, and they are recognised in the division, particularly if one spouse sacrificed career opportunities to support the household.  

Legal Insight: Australian family law emphasises the principle that contributions to a marriage are not solely financial. Contributions in the home are equally valued, ensuring a fairer assessment in the case of career sacrifices for family support.  

Step 3: Assessing Future Needs and Earning Capacities  

The court then considers each spouse’s future needs and earning capacity, which is particularly relevant in cases where one spouse may face financial disadvantages post-separation.  

• Earning Potential and Career Sacrifices – Disparities in earning capacity are critical, mainly if one spouse’s career prospects are limited due to family commitments. Courts often allocate additional resources to a spouse whose earning potential has been affected, providing financial stability.  
• Health and Age Factors – Courts also assess health and age-related limitations that could impact financial independence. A spouse facing health challenges or limited work prospects due to age may require a more significant share to secure future economic stability.  
• Special Circumstances – Other unique factors, such as primary caregiving responsibilities or dependents with special needs, may warrant additional provisions in asset distribution to ensure the financial welfare of the family.  

Legal Insight: Family law in Australia allows for a wide range of special considerations, aiming to support the long-term financial security of a disadvantaged spouse. Expert legal advice is crucial to fully account for these unique factors and advocate for a just settlement.  

Step 4: Calculating a 70/30 Distribution  

In the final step, the court calculates the division based on the total property pool, aiming for a fair distribution according to each spouse’s contributions and needs.  

• Calculation Example: If the total property pool (T) is valued at $500,000:  
  • Party 1’s Share (70%) = $350,000  
  • Party 2’s Share (30%) = $150,000  
• Asset Allocation: Each party’s share may include different types of assets. For instance, Party 1’s $350,000 might consist of real estate and investments, while Party 2’s $150,000 may include cash and retirement funds. Courts strive to match each spouse’s needs with suitable asset types to provide financial stability.  

Legal Insight: Courts evaluate not only the value but also the liquidity of assets, ensuring both parties have access to resources that meet their immediate and future needs effectively.  

Common Concerns for Couples Facing a 70/30 Split  

An unequal division, like a 70/30 split, often brings about concerns regarding fairness, financial security, and emotional well-being. Below are common issues couples may experience:  

• Financial Stability and Standard of Living – A major concern for the spouse receiving a smaller share is whether they can maintain a similar quality of life. This can be particularly pressing for primary caregivers who are managing expenses for their children’s lifestyle, education, and housing needs.  
• Division of Complex Assets – Complex assets, such as family businesses or retirement funds, can complicate settlements. Parties often worry about receiving fair value, especially when one spouse receives assets with lower liquidity, affecting their immediate financial stability.  
• Emotional and Mental Health Support – The process of negotiating an unequal split can be emotionally taxing, especially if prolonged. Access to mental health support through counselling or family support is beneficial to managing stress during this period.  

Legal Insight: Addressing these concerns is integral to an equitable process. Legal representatives help parties understand the rationale behind the split and ensure fair access to resources, even if the division seems disproportionate.  

Misconceptions About a 70/30 Divorce Settlement in Australia

A 70/30 settlement can lead to misunderstandings regarding fairness and intent. Below are common misconceptions clarified:  

• Does a 70/30 Split Mean One Partner “Wins” the Divorce? – This type of division does not reflect a victory. Instead, it is based on specific contributions and future needs, aiming to achieve a fair outcome for both parties.  
• Is a 70/30 Split Only for High Earners? – Not necessarily. A 70/30 split can benefit a lower-earning spouse, particularly if they’ve made significant career sacrifices or are the primary caregiver for dependents, to address financial imbalances.  
• Is the Settlement Permanent? – Yes. Only in very rare circumstances will the Court set aside final property orders. These circumstances include:  
  • 1. Miscarriage of justice (fraud, duress, suppression of evidence, false evidence) 
    2. Impracticable for the Orders to be carried out  
    3. one party has failed to comply with their obligations under the Orders.  
    4. Circumstances of an exceptional nature have arisen in relation to the care of the children or where the applicant will suffer hardship.  
    5. A proceeds of crime order has been made affecting the property to be distributed. 

Legal Insight: Courts in Australia prioritise fairness and may permit changes to settlements in limited circumstances, especially where one party’s situation has altered dramatically.  

How do You Improve Your Position to Negotiate?  

Negotiating a fair settlement can be challenging, especially if you’re the partner with fewer financial contributions. However, you don’t have to settle. When you can, strengthen your position by documenting contributions and needs effectively.  

Document contributions and highlight future needs  

Highlight your non-financial contributions like homemaking, child-rearing, and career sacrifices. Keep a record of these roles and responsibilities. If your earning potential is lower due to career sacrifices or health concerns, make sure these are clarified during negotiations to justify a larger share or spousal maintenance.  

The role of mediation and negotiation  

Mediation can be more affordable, quicker, and private compared to formal court proceedings. It also allows both parties to agree on terms with more control over outcomes. To maximise the benefits of mediation and achieve a favourable outcome, consider the following tips:  

To get through a property settlement, it’s best to be prepared. Gather all your financial documents, like bank statements and property titles. This way, you are ready to submit your evidence for mediation or at court at a moment’s notice.  

Stay calm and collected – no matter how emotional the property proceedings have been, keeping calm can help you make better decisions. Be open to compromise, especially if you want things to settle smoothly.  

Finally, don’t hesitate to ask for help from lawyers or financial advisors. They can give you expert advice to help you out.  

What are the Costs of Legal Representation?  

Costs for hiring legal representation during your property settlement vary depending on the complexity of the case, the assets involved, and whether it goes to trial or settles through negotiation or mediation.  

However, your lawyer’s fees (whether at hourly rates or for fixed fees) are not the only payments you have to consider.  

You have to include court costs like filing fees for your documents and divorce applications, as well as hearing fees in case your property settlement goes to court.  

There are also expert fees for valuation fees if you have complex financial assets and need accountants or property valuers to make your case in court. If you have children with your partner, you might also want to pay for child experts if there are disputes over children’s living arrangements.  

Lastly, you will have to pay for out-of-pocket expenses for smaller items like photocopying documents, courier fees, or other administrative costs.