Receive the latest mybusiness newssign up
Am I entitled to half my husband's business?

Am I entitled to half my husband's business?

When a marriage ends up in divorce and assets—including business assets—are part of the considerations, dividing the conjugal property might get a little complicated.

Property settlement for divorcing couples in Australia is determined via:

  • Identifying and attributing value of assets, liabilities, and financial resources of the couple
  • Assessing financial and non-financial contributions
  • Considering the “future needs factors”
  • Having the court decide whether the three processes are just and equitable under all circumstances

The court will first determine if there is a need for property settlement. In most cases, the court will determine that a property settlement or a change of property ownership is indeed necessary. 

In some cases, the court will decide that each party should simply keep what they currently own because:

  • The parties have kept their financial affairs and arrangements totally separate throughout the relationship;
  • The relationship was of a very short duration;
  • The parties separated years ago and have since organised affairs on the basis of an informal agreement.

Property settlement

When the court decides that a property settlement is necessary for divorcing couples, proceed following steps:

  • Identifying and attributing value to all assets, liabilities, and financial resources of the couple
  • Assessing financial and non-financial contributions
  • Considering “future needs factors”
  • Having the Court decide whether the three processes are just and equitable under all circumstances

Identifying and attributing value to all assets, liabilities, and financial resources of the couple

This involves compiling a list of all assets and liabilities that are in the individual and/or joint names of the former spouses and attributing a value to each item. This also includes the superannuation funds of both parties.

The attributed values should be as accurate as possible. If applicable, a formal valuation can be done on the couple’s assets and liabilities. This table of assets and liabilities will be used by solicitors to determine the value of the total asset pool.

It is essential to establish what the asset pool was before and after the couple started living together.

Assessing financial and non-financial contributions

Upon establishing the asset pool valuation, the solicitor will determine each party’s contributions to the pool and work out the increase in each asset’s values. The contributions to the asset pool can be considered either financial (by way of income, mortgage payments, or inheritances) or non-financial (for example, labour to undertake renovations or being a homemaker or parent).

A notional percentage is usually employed to calculate contributions.

Considering 'future needs factors'

This process involves the solicitors or the Court considering both parties’ “future needs”. It includes considering the age and health of both parties, the earning capacity of the parties, whether one or both parties have to shoulder custody and support of young children (if applicable), the duration of the relationship or marriage, and other relevant considerations.

The notional percentage reached (such as 50/50, 55/45, etc.) may be affected by the results of the assessment of future needs and can increase or decrease the formerly-established notional percentage split.

Making the settlement just and equitable

The court and solicitors will consider whether the final division of assets is just and equitable by assessing the practical and realistic effects of any proposed division of the asset pool.

Time limit for property adjustment applications

Property adjustment applications must be made within 12 months of the finality of the divorce. If both parties were in a de facto relationship, the application must be made within two years of the breakdown of the relationship.

If these do not apply to both parties, you will need special permission from the Court, although this may not always be granted.

Read more on divorce and business considerations here. 

Both parties in a divorce can get legal advice to make sure all factors are properly accounted for and ascertain that factors are reflected in the division of property at the time of divorce. Doing this as soon as possible can help both parties build their future.