DIVORCE

It is a sad fact that 40% of all marriages now end in divorce. If you had to contemplate a divorce tomorrow, would you know 1) what are the grounds for divorce?, 2) who will get custody of the children?, 3) how will the property be divided up? and 4) what is the procedure for obtaining a divorce?

Divorce law in Australia may now be summarised as follows. a) Divorce only after 12 months separation, b) property to be shared equally on divorce, c) custody of children to be shared equally after divorce.

GROUNDS FOR DIVORCE

The present Act governing marriage in Australia is the Family Law Act. This is a Federal Act and applies Australia-wide. It was passed in 1975. Before 1975, there were 14 grounds for divorce. The chief grounds were adultery, desertion, cruelty and drunkenness. There was invariably a "guilty" party and an "innocent" party. The 1975 Act swept away all these concepts. Nowadays, divorce is on a "no-fault" basis. The only ground of divorce now is that the parties have lived apart for at least one year. Conduct is irrelevant. The Court does not want to hear about it. In effect, either party to a marriage can terminate the marriage at any time. One party must move out of the matrimonial home. After a year  of separation has elapsed, they can either jointly or separately formally apply to the Family Court to have the marriage dissolved.

Who can apply for a divorce in Australia? The Act lays down that if either party is in one of the following categories at date of filing the application, then either party can apply for a divorce. The categories are: 1) Australian citizen, 2) domiciled in Australia, 3) ordinarily resident in Australia and has been so resident for one year preceding filing application.

Preferably before the parties separate and certainly before they apply to the Court for a divorce, they should have settled matters between themselves. The main matters to be settled are 1) the custody or sharing arrangements of any children of the marriage and 2) the division of property of the marriage. If the marriage partners are unable to agree among themselves about these matters, then the Court will decide matters for them. However, the parties would be very well advised to agree matters between themselves. Court proceedings including lawyers' costs can be extremely expensive. A divorce which is contested regarding both the children and the property could involve each partner in legal costs of up to $30,000.

CUSTODY OF CHILDREN

How is custody of the children decided? The Act provides that whenever the custody of children is in question, "the welfare of the children is the paramount consideration". Children are not the property of either parent. However, in considering the welfare of the children, the mother often has an advantage. It is generally considered in the best interest of a young child that it should be with its mother. Also, a working father can rarely provide adequate care for a young family. Because of these reasons, custody of the children is often awarded to the mother. However, "sharing" arrangements are becoming more common. This usually involves some arrangement like the children spending every weekend with the father and spending half of the school vacations with him. The judge will not grant a divorce until he is satisfied that proper arrangements have been made for the custody of the children.

DIVISION OF PROPERTY

How is the property of the marriage divided? There are no hard-and-fast rules laid down in the Act. A great deal of discretion is given to the judge. He can split the property between them as he considers right. However, there are some general guidelines. As a general rule, if the marriage has lasted some time, say, ten years, then the property will be split equally between the partners. If the marriage has lasted only a short time, then each partner will get back approximately what he/she has put into the marriage. If either partner is in a superannuation scheme, then the value of the superannuation will be brought in as an asset. If a business is involved, the business will be split equally between the partners if each partner has worked in the business and built it up from scratch. However, if only one partner has worked in the business and he/she has built it up by himself, then that partner will be awarded the lion's share of the business. Let us take an example. John and Mary split up and had the following joint assets.

House  (less mortgage)   75,000
Car   10,000
Household furniture   16,000
Bank accounts     1,000
Value of John's superannuation   30,000
TOTAL ASSETS                   $ 132,000
1/2 =                                        $   66,000

John will be entitled to $66,000 and Mary will be entitled to $66,000. All of the assets will have to be sold and converted into cash if they cannot agree otherwise. Often, the mother and children will decide to take their half share by taking over the house.

Costly, bitter, acrimonious and lengthy disputes over the division of the property can often be avoided by the partners agreeing to consult a mediator. Often, these days, church bodies have a mediation service for divorcing couples. An accountant would also be a good choice of mediator. The partners should both go along to see the mediator, together if possible. The mediator will proceed as follows. To verify information received, he will ask each partner to bring along a copy of his Tax Return for each of the preceding three years. 1) He will take down a list of all the assets owned a) jointly and b) by each of them separately. He will list out the assets on paper. 2) He will then ask the parties to value each asset. If the partners cannot agree on a valuation for any particular asset, then that asset will have to be valued by a professional valuer, 3) He will then ask each partner to nominate what assets that partner would like to take away from the marriage. 4) For some assets, both partners will nominate to take them away. For these assets that both want, the mediator will try to arrive at a settlement suitable to both. For example, half of the desired assets could go to one party and half to the other party. 5) Half of the value of the assets not desired by either party will now be added to each party's share. If the mediator finds that either party's share now exceeds 50% of the total, then he must negotiate with that party to eliminates some of the assets so to bring it down to 50%. The easiest way to do this is to reduce the amount transferred from the category of assets not wanted by either party. When the mediator has succeeded in getting each party to agree to the assets to be taken over in satisfaction of his/her share, then his job is almost completed in regard to the division of the assets. However, there is  one final point to be attended to. The assets that neither party wants will probably have to be sold and the cash proceeds divided between the parties as previously agreed. However, it is probable that the sale prices will not match the valuations put by the spouses on the assets at the interview with the mediator. Consequently, the mediator will have to make adjustments for this.

Let us take the example given above again. When John and Mary decided to call it quits, they agreed to go along to their local church mediation service for divorcing couples. They took along with them copies of their Tax Returns for the previous three years. The mediator interviewed them together and listed out their assets from the information given to him. This is what he came up with from the initial interview.

John Smith and Mary Smith

Division of Property on Divorce.

DETAILS VALUE JOHN WANTS MARY WANTS  BOTH  WANT NEITHER WANTS      SOLD FOR
House (less mortgage) 75,000 . 75,000 . . .
Car 10,000 . . 10,000 . .
Fridge 1,000   1,000 . . .
Washing machine      700  .      700 . . .
TV      500 . .      500 . .
Chairs (4)      800 . . .   800   500
Bed (large)   1,000 . .   1,000 . .
Bed1 (small)      400 . . .   400   300
Bed 2(small)      300        300 . . . .
Other furniture not listed here 11,300   5,000   6,300 .  .  .
Bank a/c 1,in Mary's name      600 .     600 . . .
Bank a/c 2, in John's name       400     400 . . . .
John's superannation  30,000 30,000 . .  .  .
Dog  ?    x . . . .
Cat ?    x . . .
. . . . . .
TOTAL ASSETS    $ 132,000 35,700 83,600 11,500  1,200   800

Above is the initial draft prepared by the mediator. As mentioned, John is entitled to 50% i.e. $66,000 and Mary is likewise entitled to $66,000. However, as the goods neither party wanted had to be sold and they fetched only $800 as against the valuation of $1,200, the total assets must be reduced by by $400, making a revised valuation of total assets of $131,600. Mary and John are each entitled to half of this i.e. $65,800. However, Mary wants to take over assets of $83,600. This is "over the top". She will have to revise her wishes. A possible solution would be for Mary to take over the house ( including the mortgage loan) at $75,000. The parties could then agree that Mary would repay the amount of $9,200 (i.e. $75,000 less $65,800) to John, say, by monthly payments over two years until paid off.

It will be seen from above table that both parties want to take over some assets. It seems Mary will have to forego her claim to these. Where items are claimed by both parties and they cannot agree on how to split them, then the best final solution is to sell the items and distribute the cash proceeds.

The last category in the table above, i.e. items that neither party wants, will have to be sold and the cash proceeds distributed.

At the end, the mediator will prepare a final copy of the above distribution statement and give a copy to each party. This will show the assets taken over by each spouse. Normally, it will show that each spouse has received 50% of the total assets.

It will be seen that by consulting a mediator, the parties have converted what could have been a costly and bitter dispute to a merely clerical function.

MAINTENANCE PAYMENTS

How are maintenance payments for children arrived at? Since 1st October 1989, maintenance payments for children have been assessed and collected by the Child Support Agency. This Agency is part of the Australian Taxation Office. Payments are now collected under the PAYE tax system. The amount to be collected is calculated by the Agency and it then notifies the employer of the amount to be deducted. The employer has to deduct the amount from wages each payday and remit it to the Tax Office once a month. The Department of Social Security pays the amount to the other partner, who is usually the mother. Whenever a deserted mother applies to the Department of Social Security for assistance, the Department must set in motion the mechanism to collect maintenance from the father. The amount to be paid is assessed according to a formula. An outline is as follows. Ascertain the father's weekly income. This is not his current weekly earnings but his earnings for  the previous year which are increased by the CPI. Subtract an amount for living expenses. For a single person, this is usually equal to the current Single Parent's Pension. From the remaining money, a percentage is calculated. The percentages are:

1 child 18% of net wages
2 children 27% of net wages
3 children 32% of net wages
4 children 34% of net wages
5 or more children 36% of net wages

If the wife works and earns more than the average weekly wage, then the amount that the husband has to pay will be further reduced. The average weekly earnings at present are $575. If the husband has children of a second marriage to support, his contributions will also be reduced

Let us take the example of John and Mary again.

When John and Mary split up, they had three children. Mary took over the house and undertook to pay John off in time. It will be recalled that the house less mortgage was worth $75,000 and Mary's half share of total assets amounted to only $66,000. It was agreed that Mary should take over the custody of the three children. Mary stays home to look after them. John continues to work. He receives an annual salary of $30,000. The maintenance is calculated as follows.

John's weekly earnings based on previous year's income income increased by the CPI is $615.

Current Single Parent's Pension is $146 per week.

Average weekly wage 615
less living allowance 146
AVAILABLE WAGES     469
32% of $469 =                $ 150

John's employer will take $150 out of his pay each week. It should be noted that this amount is not deductible for tax purposes when John completes his annual Tax Return.

PROCEDURE

What is the procedure for obtaining a divorce? First of all, the partners must have been living apart for at least 12 months. During this period, they should have settled all matters between them concerning 1) the children and 2) the property of the marriage. After 12 months have elapsed, they should jointly apply for a divorce. They do this by completing only one set of papers between them. For an uncontested divorce, there is no need to employ a lawyer. They can handle their own divorce without difficulty. One of them should go along to the Family Court office in their State capital city. Obtain the necessary forms there. The Court staff will assist in completing the forms. They can be filled in pencil at the Court Office. They must then be taken away and typed. They must be signed by both parties and returned to the Court. A date is then fixed for a hearing. Both parties must attend. The hearing generally last for about five minutes and will be a formality. A Decree Nisi is pronounced. The divorce becomes absolute a month later without any further action by the parties. If there are no children to the marriage, the procedure is even simpler. A divorce by mail can be obtained. The parties complete the forms as above but they do not attend the hearing. The divorce certificate is sent to them by mail at a later date.


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