The definition of these two categories can make a considerable difference to a settlement. There is no formal definition, but a general rule is that a court will consider a co-habitation of up to 10 years a short-term relationship and over 10 years as a long term relationship. It doesn't matter when or if you're married. For the purposes of settlement, the co-habitation period is usually the timeframe that is considered.

With 'short-term' relationships, a settlement is usually based on the following guidelines:

• Property owned individually prior to the co-habitation is retained by the individual who brought it to the relationship. For example, if you owned a car before you began co-habitation, then it will remain your sole property at settlement. You will not have to pay any of it's value to your former spouse.

• Property purchased during the co-habitation is considered a matrimonial asset, and will usually be divided 50-50 between the two parties. This includes the portion of superannuation earned during the co-habitation. More about super further down the page.

• Any pre-existing asset sold during the co-habitation and subsequently 'replaced' becomes a matrimonial asset. For example, if you owned a car before the co-habitation, then sold the car and bought a new one during the co-habitation period, then the new car is a matrimonial asset and it's value must be shared by the parties. This applies to almost any asset, including vehicles, property, shares etc.

• Assets purchased individually after separation, but before settlement are considered personal assets of the individual and are not included in any property settlement. This also applies to long-term relationships.

Long term - Over 10 years:

Long term relationships are different. In this case a court will almost always consider everything to be a matrimonial asset, irrespective of what each party originally brought to the relationship. This means all property, vehicles, savings, shares and superannuation. Assuming there are no children, the standard split is 50-50, unless there are exceptional circumstances.

This can often be a point of contention between the parties. A few guidelines are:

The house

If there is a matrimonial home, then generally the person remaining in the home after separation has the first option to pay the other party out for it's net value, assuming they have the ability to do so. The courts would consider that their remaining in the house gives them a greater right to retain the property. This is particularly true if a reasonable time (say 6 months+) has elapsed between separation and settlement proceedings. There are some exceptions to this rule, such as if the spouse that moved out had been subject to violence or abuse, or if there are matrimonial children involved. However, courts take a very dim view of spouses who make false claims of violence or abuse in an attempt to regain the matrimonial home after having second thoughts about their decision to leave it.

The party remaining in the home must pay the other party their share of the net value of the home. Valuations are best obtained from two or three registered valuers, however three appraisals from real-estate agents are sometimes an acceptable alternative. Valuations from registered valuers will hold more weight.

The cars

Generally, vehicles are retained by the person who usually drove them before the separation. It doesn't matter who's name the vehicle(s) are registered in, or even if they are registered in a company name.

The party retaining the vehicle(s) must usually pay their former spouse their share of the current value of the vehicle. Generally, three valuations from car dealers are acceptable as a valuation. The accepted value of a vehicle is it's estimated Private Sale price, rather than a trade-in valuation or a dealer-lot price.

The use of classified advertisements (such as the Trading Post or the weekend newspapers) are not an accurate source of valuations as the prices are always higher than the real value. ie: they are what the seller wants, rather than what they actually get. The difference can be many thousands of dollars.

If you doubt the valuation provided by your former spouse, then industry-standard publications such as Glass's Guide will give an idea of used vehicle valuations at no cost. Simply enter the make and model and check to see if the provided valuations fit within the estimated value for a private sale.

The contents

The best system for sharing contents is to amicably split them between the parties, on a 50-50 value basis.

Business assets

If one spouse runs a business, then the assets and/or tools of that business will be retained by the spouse who operates that business. A court will almost never decide to physically split business assets, as it would put undue strain on the ability to carry on the business. However, the matrimonial assets of the business (ie those assets acquired during the period of co-habitation) are considered joint assets for financial purposes, so the spouse retaining them must provide the other spouse with an adjustment for their share of the value of the assets.

Gifts and cash advances

This is a regular point of bitterness when a couple separates.

It is quite common for the family of one or both partners to give monetary gifts to the (thought to be) happy couple. You may think that once this gift is given that it becomes a joint asset. This is not usually the case. It greatly depends on when the gift was given:

• If the gift was given very soon before the breakup of the couple (eg less than 12 months), then the partner who's family gave the gift will almost certainly be entitled to a full credit in their favour.

• If the gift was given relatively soon before the breakup (eg 1-5 years), then a partial credit is likely.

• In cases where more than 5 years has passed, then only a small or no credit is likely, unless the gift was a very large one (eg $50,000+), in which case a partial credit is still quite likely.

While it is correct to argue that these were gifts to the couple, they were undoubtedly given on the assumption that the couple's relationship was strong and would continue. Obviously, the family would not have presented the gift if they had thought the relationship would soon break down. As such, a full credit in the favour of the partner who's family presented a recent gift is both legally and morally correct.

If the monetary gift has since been spent or absorbed into the couple's finances, then the credit will usually take the form of an adjustment in the settlement.

Superannuation

It is now compulsory for superannuation to be considered in any settlement. If both parties have super, then the matrimonial total is shared between the couple. Adjustments for super can either be made as an adjustment at the time of settlement, or flagged for release when the super is due to be paid at retirement. I recommend the former, as it is far less hassle than flagging a portion for distribution in the distant future.

• For short-term relationships (<10yrs) super will be shared on a pro-rata basis. For example, if you have been working for 20 years but only co-habitating for 5 years, then your partner will be entitled to half of the matrimonial asset, that is: 50% of 5/20ths of your superannuation. Likewise, you would be entitled to 50% of their 'matrimonial' super, if they have any. If they had been working for 10 years for example, then you would get 50% of 5/10ths of their super.

• In long-term relationships (>10yrs), super will usually be shared on a 50-50 basis for the entire amount.

Here is where so many arguments begin during settlement.

Many people do not understand what the value of an item is, and this leads to the belief that one is being 'ripped off' by their former spouse. It is very important that the concept of value is clearly understood by both parties:

It has little to do with the perceived value of an item, and absolutely nothing to do with it's original cost. This is particularly true of vehicles, electrical items such as computers, and of household furniture. That $5000 PC you bought a year ago does not have a value of $5000! In fact, it would be lucky to be valued at 50% of it's original price after 12 months. Conversely, some assets are worth more than their original purchase price. For example, real estate and collectibles often appreciate over time rather than depreciate.

While there are mobile valuers available to go through your home, it's generally not worth the cost of the service. Acceptable alternate methods of valuation are classified advertisements (although it must be remembered that these are asking prices, not sale prices so they are usually inflated), completed item listings on internet sites such as eBay (Note that you must use completed listings, not opening bids or unfinished auctions). You should try to obtain two, or preferably three, similar items which have sold to provide an accurate valuation.

This can often be yet another point of contention between the parties. A couple of common questions are:

My partner moved out. Can they come into the house whenever they want? Can I change the locks?

If one party chooses to move out of the home for the purpose of separation, then they should not generally enter the home without consulting the party who is remaining in the home. There is an expectation of privacy for the remaining party, so you should avoid entering the home without them being present, and given notice. This guideline also protects against accusations of theft or damage to the home or it's contents.

Changing the locks can be a bad idea, as it can cause increased tension between the parties. However, if the leaving party has removed all their personal effects (clothing etc), then you can make an argument for changing the locks, so long as they retain access to the home and other matrimonial assets on request. You can also change the locks if it can be demonstrated that you have a threat or risk of asset removal or damage by the estranged party.

My partner wants access to my car. Do I have to give it to them?

If it was the car primarily driven by you before the separation then it will be retained by you, even if it's registered in the other parties name. They do not have any right to take the car, and you do not have to give it to them. If they take it, then a court will order they return it to you.

If they want to 'borrow' the car for some purpose (eg: a valuation), there is generally no obligation for you to loan it to them. Especially if it is your primary form of transportation. For valuation purposes, they are able to engage a mobile valuer (at their cost) if they choose. You should give their valuer access to inspect the vehicle at a time convenient to you.

Does the party who left the home have to continue paying half of the mortgage?

This is a very grey area. Technically, for financial purposes a separated couple treat their home in a landlord/tenant system. So both parties are the landlords and the party remaining in the home is treated as though they were a tenant. They would therefore be paying the market rental to the 'landlords'. This basically means that they would pay 50% of the market rent to their former spouse (they 'pay' the other 50% to themselves).

Because 50% of the joint expenses is usually much higher than 50% of the market rent, in practise it usually works like this:

• If the leaving party immediately stopped paying towards the mortgage and all the other above joint expenses, then the party remaining in the home can expect some adjustment to them at the time of settlement, to allow for them having paid more than their share.

• If the leaving party continued to pay 50% of all the joint expenses up until settlement, then they can expect some adjustment to them at the time of settlement for the 50% of the 'rent' due to them from the remaining party.

• If the leaving party ceased paying their share at some time in between separation and settlement, then adjustments can be negotiated based on the duration they paid their share, however for the sake of simplicity it is often just left out of any settlement unless there is a large adjustment due one way or the other.

It should also be noted that in the eyes of a court, the decision to cease making contributions to the mortgage adds further weight to the remaining party's claim to retain the home in any settlement.

How do we formally divide our assets?

The easiest and cheapest way to divide your assets in a legally binding agreement is to complete a consent orders kit available from the Family Court of Australia. You and your former spouse can fill out and sign the agreement, then have it ratified at the local courthouse. You should both seek basic independent legal advice on the consent orders you are signing so you fully understand them.

Do I need a solicitor?

In a word: DON'T!

Unless you have a huge asset pool that is causing a huge argument, then it simply does not make sense to take your case to court. Why? Because of the massive costs involved. The only people who benefit from a case going to court are the lawyers.

The average cost of taking a property settlement case to court is $35,000 per party. The absolute minimum it will cost you is about $20,000 each, and it is not at all uncommon to cost upwards of $60,000 each. In other words, unless you are arguing over valuation differences in excess of $70,000 then you will be worse off taking it to court, even if you 'win'. If you lose, then you will be much, much worse off. For example, the cost of a single solicitor appearing on your behalf in family court is up to $5,300 per day. Larger law firms will also usually use a junior counsel at a further cost of $1,600 per day. This is in addition to many thousands in preparing documents before and after the hearing. A typical property settlement takes several days in the family court. You can see a full list of recommended charges here. Note that many solicitors charge higher amounts than listed in that document. If they do, then they must notify you in writing of their costs before they charge them.

This is not to say that either party should accept ridiculous claims, but if there is a serious argument over valuations, your best option is to organise your own independent valuations (at least three) and if they differ from the originals, then negotiate from that position. In the case of vehicles, Glass's guide gives you a good ballpark to work from. If the quoted figure is considerably different to the valuation provided by your spouse, then it may pay to get your own valuation. If not, then it is probably not worth the hassle and cost. In the end, it's better to accept a couple of thousand dollars difference than spend tens of thousands on a pointless court case.

Any solicitor that advises you to take an average, childless, property settlement to court is not acting in your best interests, they are acting in their own interests. There are plenty of lawyers out there who are far more interested in lining their own pockets than they are in providing you with the best advice. Watch out. If your solicitor advises you to go to court, you really need to think long and hard about whether your position will be better or worse after the court case. Remember that even if you get everything you are claiming, you will likely walk away with less money than if you had just accepted the best offer on the table from your former partner. This may sound unfair, but it is usually the case.

It's extremely important never to get wound up in argument and lose sight of your final objective: To move on and begin your new life. Every dollar you give to your solicitor is one less dollar you'll have to start your new life, so the less you spend the better your future position will be.

Alternatives to family court

More Information

Find out more about separation and property settlement:

Federal Government's Family Relationship Centre

The Family Court of Australia

Relationships Australia