70/30 divorce settlements in Australia: what is it & what do you need to know?
A 70/30 split is becoming increasingly common in Australia, particularly in cases where contributions and future needs are significantly unbalanced. Dividing assets equitably is one of the most complex issues to address. While a 50/50 split is often seen as the standard in asset and property division, it is not actually the most common type of split. The courts consider several factors when assessing property division, all of which influence the final outcome.
For example, if one party contributes most of the assets to the relationship, it may be fairer for them to receive a larger share. In this article, we will explore what a 70/30 divorce settlement involves, the factors influencing asset division, and how Australian family law courts assess the fairness of property settlements to ensure a just and equitable outcome.
How is a just and equitable split decided in an Australian divorce settlement?
A ‘just and equitable’ outcome is a legal term in family law that ensures fairness for both parties when considering the broader context of the divorce.
In Australia, the division of assets and property in a divorce is guided by principles set out in the Family Law Act 1975. The main factors assessed include:
- Contributions to the marriage: This includes both financial contributions, such as income and property brought into the marriage, and non-financial contributions, like homemaking and childcare.
- Future needs of each party: Courts evaluate each person’s age, health, income, and earning potential to understand future financial needs, particularly if one party has reduced earning capacity due to caregiving responsibilities or health issues.
- Length of the relationship: Longer marriages generally lead to a more equal division of assets, while shorter marriages may result in a division more reflective of each person’s financial contribution.
- Overall fairness: The goal is to ensure a fair outcome, so the court will assess whether the proposed division leaves both parties in a reasonable financial position.
These factors enable the court to achieve a fair and equitable division of assets, tailored to each partner’s individual circumstances.
So, what is the 70/30 rule for divorce?
A 70/30 split often arises as a practical solution when financial and non-financial contributions vary significantly. The term ’70/30 rule’ in divorce refers to a commonly observed asset distribution formula that aims to reflect each partner’s contributions and future needs. However, it’s not an actual rule, but rather one of the more frequent settlement outcomes after a relationship ends.
This ratio is typically seen in cases where one party has made considerably more significant contributions or has greater responsibilities, such as being the primary caregiver for children, or earning substantially less income due to caregiving duties.
What is a 70/30 divorce settlement?
A 70/30 divorce settlement refers to a property division in which one party receives 70% of the total asset pool and the other 30%. This division takes into account both financial and non-financial contributions made during the marriage and each party’s future needs. In Australia, the Family Law Act 1975 governs these property settlements, ensuring that the outcome is fair and reasonable for all parties involved.
What is the most common divorce settlement outcome in Australia?
While each divorce is unique, the most common asset division in Australia is a 60/40 split. However, the court may consider a 70/30 split when one partner has made significantly greater financial contributions or has a lower earning capacity after the divorce. Courts consider various factors and legal precedents to determine if a more imbalanced asset division is justified.
Understanding marital assets in a 70/30 settlement & determining the total asset pool
In any property settlement, the first step is to identify the total asset and property pool, which includes all assets, liabilities, and financial resources held by the couple. This pool may consist of financial accounts, properties, business assets, superannuation, and personal items of significant value. The pool is then divided based on contributions, needs, and specific circumstances to determine each party’s share.
Marital assets refer to all assets and debts acquired during the marriage, which are subject to division upon divorce. This includes the family home, financial investments, superannuation, vehicles, and debts on jointly acquired assets (such as mortgage and car loans). The court’s goal is to ensure a just, fair, and equitable distribution of these assets to support both parties’ future financial stability.
Is a 70/30 split fair?
Whether a 70/30 split is fair depends largely on each party’s contributions and needs. Equitable distribution does not always equate to an equal division; rather, it seeks a fair and just allocation, considering factors such as future needs, earning capacity, and indirect contributions like emotional support and caregiving.
Courts aim to deliver an outcome that ensures financial security for both parties, particularly when one spouse has sacrificed career progression to support the family. In cases where one parent assumes full-time parenting responsibilities (child custody arrangements), it is reasonable that they may require additional financial resources to manage this responsibility.
How common is a 70/30 split?
A 70/30 split, while less common than equal or 60/40 divisions, is not unusual in certain circumstances. When there is a marked disparity in financial resources or future earning capacity, the court may consider such a division to be fair and equitable. Family lawyers frequently encounter 70/30 splits in cases where one party’s caregiving responsibilities have significantly restricted their professional growth and financial opportunities.
Non-financial contributions and the 70/30 divorce settlement
Non-financial contributions, including homemaking, child-rearing, and emotional support, play a significant role in Australian divorce settlements. When a primary caregiver or former partner has left the workforce or has limited career progression to support the family, the court may allocate a larger share of the assets—such as a 70/30 division—to reflect their sacrifices and the resulting impact on their earning capacity.
Financial contributions in a property settlement
Financial contributions encompass direct monetary inputs from both parties, including income, investment returns, and savings. The court considers the value and duration of these contributions when determining the division of marital assets. If one spouse was the primary income earner, this factor could influence the property settlement, potentially affecting the proportional split.
Assessing contributions and financial resources
The court evaluates financial assets such as real estate, bank accounts, and other financial holdings, along with resources like superannuation. This assessment considers both financial and non-financial contributions made by each party during the marriage. The resulting division aims to achieve fairness, which may, in some cases, result in a 70/30 split that reflects the unique circumstances of the relationship.
Future earning capacity and financial resources
Future earning potential, particularly when one party has sacrificed career advancement for family responsibilities, is a critical factor in determining a 70/30 property division. Courts carefully assess each party’s potential income and their capacity to achieve financial independence post-divorce. To address these considerations and ensure a fair division, a binding financial agreement can provide clarity and preemptive solutions tailored to the parties’ unique circumstances.
Pre-existing financial agreements
For wealthier individuals, a financial agreement (prenuptial or binding financial agreement) can outline terms for asset division, such as a 70/30 split, to safeguard significant assets.
These agreements ensure a larger share remains with the wealthier partner, reflecting their financial contributions and pre-existing assets. By providing clarity and avoiding lengthy court disputes, they offer a mutually accepted, legally binding solution tailored to both parties’ needs and expectations.
Seeking legal advice for a 70/30 divorce settlement
When considering a 70/30 split, it’s advisable to seek legal advice. An experienced family lawyer can evaluate the complexities of each party’s situation, advise on asset division, and help pursue a legally binding agreement. Professional guidance can also help clarify the intricacies of court proceedings and consent orders.
Property settlement cases: How courts determine a just and equitable outcome
In property settlement cases, the court’s primary concern throughout the complex process is to achieve a just and equitable outcome. Factors such as the length of the marriage, the roles of each partner, and their financial circumstances are all weighed to arrive at a decision. This process ensures that all the assets divided align with each party’s needs and contributions.
Pathways for 70/30 settlement: Mutual agreement vs court proceedings
If you and your ex-partner agree on a 70/30 split, and it’s fair, it can simplify the divorce process. A family lawyer can work with you to ensure that due care has been given to all of the criteria required for a just and equitable split. Legally binding consent orders allow for a final settlement without court proceedings. If no agreement is reached, the court will determine a fair outcome based on the Family Law Act and relevant precedents.
Court considerations in a 70/30 divorce split
When approving a 70/30 split, the Family Court considers all circumstances, including indirect contributions and future needs. The goal is to avoid disadvantaging either party and ensure an outcome that supports both parties moving forward. Factors such as contributions, age, health, and child custody arrangements can influence the Court’s decision.
How a family lawyer can help you achieve a fair settlement
A family lawyer provides vital support in divorce asset division, guiding clients through the legal criteria for a fair split. In complex cases, experienced lawyers navigate the process and advocate for equitable outcomes.
They ensure financial documents and essential information are accurately presented, aligning the case with Australian law and court expectations. Lawyers help highlight contributions—financial and non-financial—while addressing future needs, such as health, career sacrifices, or childcare responsibilities, that impact financial stability.
With tailored advice, they assist in negotiating settlements that reflect each party’s contributions and circumstances. Their expertise ensures a fair and balanced division, reducing stress and uncertainty.
Contact our team today to discuss your situation and see if a 70/30 divorce settlement is suitable for you.