Property settlements can be complex, especially when the separating couple has a large amount of assets.

But what happens when one spouse has received a large personal injury payment? Is this considered a ‘contribution’ to the overall property pool or is it treated separately?

There is no precise mathematical formula in calculating a division of property. However the Family Law Act does set out a number of steps to work through when determining a property settlement.

The first step is to identify and value all of the property owned by the parties, including any property owned jointly or separately. The second step is to evaluate the contributions of the parties to the marriage or de facto relationship. This includes financial contributions, non-financial contributions and contributions made as a parent or homemaker.

Thirdly, the court will take into consideration the factors affecting the future needs of each party. They may consider the age and state of health of the parties, whether either party has the care and control of the children of the relationship (under the age of 18 years), the extent to which the marriage has affected the earning capacity of either party, and any other factor the court deems relevant.

Lastly, the court will determine whether the proposed division of property is “just and equitable”.

In the case of Aleksovski v Aleksovski  the Full Court considered the treatment of a personal injury award in a property settlement. The separating couple had three children of the marriage and earned similar incomes. Eight years prior to separating, the wife was injured in a motor vehicle accident and received $143,000 in compensation.

The Trial Judge treated the compensation amount as a “financial contribution” of the wife, and allowed a 15 per cent adjustment in her favour. The wife was given a 77 per cent share of the total property pool.

The husband appealed the decision and the wife’s entitlement decreased by 15 per cent, to 62 per cent. In their judgment Justices Baker and Rowland held that, in most cases, a personal injury award will be treated as a contribution by the party who suffered the injury, and adjustments will be made accordingly.

The circumstances of the award may also be considered as a factor affecting the future needs of the injured party, if it impacts on their earning capacity.

If you are seeking advice about a property settlement, our team is here to help. Lucy Urach is our expert family lawyer, assisting clients with a range of complex legal matters. Call us on 4902 3800 or email office@burkemeadlawyers.com.au

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Lucy Urach

Lucy Urach

Family Lawyer

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