Division of matrimonial property in Australia
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The way property is divided on divorce is a key issue for many families, and one that has attracted considerable debate over the past two decades. Yet despite the importance of property division to parties negotiating the divorce transition it has been more than a decade since broad-based empirical research on this issue has been conducted in Australia (i.e., Settling Up, McDonald, 1986a). To address this gap in the research, data from the Australian Divorce Transitions Project are analysed to provide an insight into the way in which women and men are dividing their property when they divorce.
The Australian Divorce Transitions Project is a random national telephone survey of 650 divorced Australians conducted in late 1997 by the Australian Institute of Family Studies. The survey includes information on private settlements as well as those settlements that were judicially determined. Drawing on these data a number of specific issues are explored including the nature and value of the assets on separation of women and men. The share of property women and men receive at settlement is also examined, and the extent to which the various contributions and needs specified by the Family Law Act contribute to the share of property received is tested. The final issue examined concerns the extent to which women and men would be worse (or better) off under a system of property division that results in equal shares being allocated to the husband and wife.
In essence, the data suggest that little has changed since the publication of Settling Up in the way matrimonial property is divided. The way women and men divide their property on divorce primarily reflects financial contributions to the marriage, and concern for the future welfare of the children. To this end the principles that govern the division of property in Australia are consistent with the law. The future financial needs of the former spouse may, however, have been overlooked by parties when allocating property on divorce — a shortfall that, in part, reflects the constraints imposed by the limited wealth available to a large minority of couples on separation.
The aim of this Working Paper is to draw on recent data from the Australian Divorce Transitions Project to provide an insight into the way in which women and men are dividing their property when they divorce. The Research Paper provides an empirical analysis of matrimonial property division in Australia, rather than a legal analysis. A number of specific issues are explored including the nature and value of the assets on separation of women and men. The share of property women and men receive at settlement is also examined, and the extent to which the various contributions and needs specified by the Family Law Act contribute to the share of property received is tested. The final issue examined concerns the extent to which women and men would be worse (or better) off under a system of property division that results in equal shares being allocated to the husband and wife.
Before turning to the methods of the survey and a detailed account of the findings, the research needs to be placed in a broader context. In the first section of the Research Paper a brief outline of the legal framework for property division in Australia is provided. This is followed by a discussion of current proposals for reform and a brief outline of relevant policy and socio-demographic changes that have occurred over the past decade that may have impacted on the way property is currently divided on divorce.
The Australian system for dividing the matrimonial assets on divorce is a ‘separate’ property regime. On separation, the starting point when dividing property is that each spouse retains ownership of the property legally theirs. This is, however, only a starting point. Under the financial provisions of the Family Law Act 1975, the Family Court has the discretionary power to alter parties’ property interests on marriage breakdown if it is satisfied that, in all the circumstances, it is just and equitable to make the order. Exercising this power requires the court to consider the parties’ respective contributions to the property and other factors including their future needs. Where spousal support is sought in addition to a property order, it becomes the final stage in the process.
More specifically, when dividing the property the court is directed to take account of the financial and non-financial contributions made to the property and to the welfare of the family. Non-financial contributions in particular include any labour that may have increased the value of the property as well as contributions made to the welfare of the family through unpaid work at home and care of the children (FLA s. 79(4)).
In theory the task of dividing property based on the parties’ respective contributions appears simple. However, in practice there are clear difficulties involved in comparing contributions which are fundamentally different from one another (Parkinson, 1999). In the case of non-financial contributions, there are also difficulties involved in placing a monetary value on the contributions made.1 This particular concern has attracted the considerable attention of law reformers over the past two decades,2 some of whom have recommended restricting judicial discretion in evaluating contributions by introducing a starting point of equal sharing in the value of the matrimonial property - a starting point that is based on the principle of equal contribution by the parties to the property of the marriage.
Having determined the respective shares of property based on these contributions, the court is then directed to make an adjustment to take account of other factors including the future needs of each of the parties. The estimation of future need is based on factors or circumstances of a broadly financial nature such as the age and health of the parties, employment prospects and financial resources, responsibility for the care of children post-separation and divorce, the duration of the marriage and the extent to which it has affected the future earning capacity of the parties. In all there are fifteen largely prospective factors for consideration covering what each party is likely to need and what each is able to pay to support the other (the factors are set out in FLA s 75(2)).3
In practice, this second stage in achieving a just and equitable settlement is frequently employed to take into account the future financial needs of women and children. Women with dependent children can be at a considerable disadvantage compared to men in terms of their financial circumstances and their income earning potential following marital dissolution. In particular, single mothers and older women living alone post-divorce can experience a drastic fall in living standards, with many becoming (and remaining) poor, along with their children (Weston, 1986, 1993).
This economic vulnerability of women post-separation can be attributed to a combination of social and economic factors, many of which operate independently of marriage. These factors include women's weaker position in, and attachment to, the labour market (Funder, 1986b; Wolcott, 1997) and their relatively lower earnings compared with similarly aged men (ABS, 1998; Bryson 1996).
Other factors, by contrast, relate more specifically to the roles that women adopt during and after marriage (Funder 1986b). For example, during marriage the couple may decide that the husband's income earning capacity will be promoted while the wife assumes greater responsibility for caring for children and home making. Given the needs of children and men's usually higher earning capacity, this arrangement can work well — unless the marriage ends. On separation the costs of this division of labour during the marriage, such as loss of immediate earnings and reduced ability to earn and income in the future, place these women in economically precarious circumstances post-separation and divorce (Funder, 1992; 1993).
While simplified here, the detailed financial provisions that govern the allocation of property on divorce are inherently complex and there is broad scope for disagreement amongst the judiciary and the parties themselves as to the interpretation of these provisions (Parkinson, 1999). This is not surprising given that the law confers such wide discretion in settling property matters. In addition, the law guides parties’ actions at a time in their lives when they are under considerable emotional and financial stress, and at a time when mutual consideration for one another’s welfare and due recognition of their respective contributions to the marriage may no longer be the norm (Grote & Clark, 1998).
In such an environment, dividing property on divorce is a difficult task, and one which is made even harder for the sizeable minority of women and men who settle their property matters without formal legal representation (Dewar, Smith & Banks, 2000). There is, therefore, potential for discordance between the provisions of the law described above, and the application of these provisions by women and men who ‘bargain in the shadow of the law’ (Mnookin & Kornhauser, 1979). The extent to which there is a match between the way women and men divide their property and the provisions of the law, is one of the issues that this Research Paper will address.
Current reform agenda
A recent Government discussion paper on property and family law reform, the content of which is summarised below, provides the platform for the Federal Government’s current reform agenda for property and family law. In March 1999 the Government issued the discussion paper ‘Property and family law: Options for change’ outlining a number of options for property division reform. The two options for reform that were presented in the discussion paper include a continuation of the current separate property regime but with a presumptive starting point of equal sharing based on the assumption that each party has contributed equally to the property. Under this option the Court would retain discretion to depart from equal sharing to recognise either disparities in past contributions or in future needs.
The second option was a more radical proposal in which property acquired during the period of the relationship would be classified as ‘community property’ to which each party would have an equal entitlement on marriage breakdown. Under this second option departures would also have been allowed on the basis of future needs or compensation for loss of income (or earning capacity) arising from the marriage.
The discussion paper also proposes that superannuation would be dealt with in accordance with the terms of the government’s position paper released in 1998 (Superannuation and Family Law: A position paper, Attorney-General’s Department, 1988). Since the release of this paper in 1998, legislation has been introduced into parliament to permit the division of superannuation on divorce. The Family Law Legislation (Superannuation) Bill 2000, if enacted, will amend the Family Law Act 1975 and the Superannuation Industry Supervision Act 1993, to provide for the division of superannuation interests on marriage breakdown. The way in which superannuation entitlements are to be divided will, however, be dependent on the model of property division adopted (see Dewar, Sheehan & Hughes, 1999 for further discussion of family law reform and the treatment of superannuation on divorce). The Government called for submissions on the merits of these proposed options yet left open the possibility of adopting other models of reform that the community believes would be of benefit.
In a speech to the National Press Club on 27 October 1999, the Federal Attorney-General reported the outcome of consultations on this paper. In essence, the Attorney-General reported that neither option had received significant support. Instead, "the submissions overwhelmingly supported the retention of the status quo, with some minor modifications" (Attorney-General, 1999:10). Thus, while no major reform of the current property regime will be undertaken, there will be some "tidying up" of the current provisions. In particular, minor amendments are planned that will clarify the factors to be considered in property and spousal maintenance proceedings. The s 75 (2) spousal maintenance factors will be separated from the provisions governing property division and a discrete set of factors for the operation of s 79(4) will be devised that includes a modified version of the current s 75(2) factors. The exact nature of these modifications is not yet known.
Given that the Federal Government is in the process of reforming property and family law, it is considered timely to have available up-to-date data on the ways in which couples divide their property on divorce. Few approaches enable nationally representative estimates to be obtained of both court ordered and registered agreements and private arrangements, and for this reason the Australian Divorce Transitions data are significant. Such information is necessary to inform the reform agenda and to provide a baseline against which and any corresponding change in the way property is divided can be later evaluated.
The changing context
A further reason why up-to-date information on property division is needed is that more than a decade has passed since research on the division of property that covered both privately negotiated and judicially determined settlements was conducted (i.e., Settling Up). Since that time there have been a number of broad-based policy, economic and demographic changes in Australia that may have influenced the way in which property is divided.
One of the core changes has been the introduction of the Child Support Scheme (collection in 1988 and assessment in 1989). This is a major legislative reform that has arguably reduced the need for the day-to-day support of children to be taken into consideration in property proceedings. In addition, recent research suggests that the Child Support Scheme has ameliorated the post-separation financial position of some mothers with dependent children. Drawing on data from the Australian Divorce Transitions Project, Smyth and Weston (2000) found that for a small group of resident mothers whose main source of income was wages, child support lifted their financial resources above the Henderson poverty line (Smyth & Weston, 2000: 14).
Another core change is the continued growth in women’s workforce participation prior to and during marriage, particularly in the area of part-time and casualised employment (Wolcott, 1997; Office of the Status of Women, 1999). Concomitant with increases in women’s educational attainment (Norris & Wooden, 1996), these kinds of changes may have increased women’s financial contribution to the matrimonial property and the welfare of the family. It may also have improved their chances of being in, or finding paid work when the marriage ends, thereby reducing the economic toll of separation and divorce.
In addition, changes in fertility and the nature of relationships may also imply some mitigation of the economic costs of separation and divorce for women. The increasing tendency for couples to live together before marriage, to marry at a later age, and have fewer children (de Vaus, 1997a; 1997b), are demographic shifts that may extend the period of time in which women lead financially independent lives. This may also result in increased contributions by women beyond the domestic assets of the marriage (such as the family home), and their greater financial resilience following separation and divorce. However, this is not to say that the adverse economic consequences of divorce for women have all but disappeared. Drawing on data from the Australian Divorce Transitions Project, Weston and Smyth (2000) found that sole mothers, and women from long-term marriages who live alone, are still more likely than men to experience financial hardship after divorce, and the hardship they experience is considerable.
1 Although calculating a monetary value for non-financial contributions is difficult, efforts have been made to do so. For example see Beggs and Chapman (1988) and more recently Chapmen et al, (1999), for estimates of the earnings women forgo because of the need to care for children. There are, however, no current Australian estimates available of the earnings gained by the breadwinner in having a spouse who stays home to have and care for the children.
2 The Joint Select Committee of Parliament conducted the first review of property and family law. In its 1980 report Family Law in Australia, it recommended consideration of a community property regime in which there would be joint matrimonial property (where the parties would be presumed to own property in equal shares) and separate property. This report was soon followed by an in-depth examination of matrimonial property law by the Australian Law Reform Commission. This report (Matrimonial Property, 1987) recommended the retention of the separate property regime with a starting point of equal sharing in the value of the property of the marriage. This recommendation was never implemented. The joint select committee proposed a similar agenda of reform in 1992 in its report (The Family Law Act 1975: Aspects of its operation and interpretation). The recommendations of this report were later reflected in the Family Law Reform Bill (No 2) which was released as an Exposure Draft in December 1994. The Bill attracted extensive criticism on the grounds that a starting point of assumed equal contribution to the marriage as a whole would become a de facto finishing point of assumed equal entitlement. A revised version of the Bill was approved by the Senate Legal and Constitutional Committee, and was introduced into parliament, but lapsed on the calling of the 1996 election.
3 These factors are more broadly referred to by the Family Court as the 's 75(2) factors' - a label that recognises that this adjustment is not only made on the basis of future financial need. Any other fact or circumstance of a broadly economic nature, which in the opinion of the court the justice of the case requires, can be taken into account (FLA s. 75(2)(o)).
The rationale for the study now considered emerges from the discussion above. In particular, property division remains a key issue for women and men during the divorce transition. Further, there is clearly a need for up-to-date information on the division of matrimonial property in Australia given the presence of major policy, economic and demographic change, as well as the possibility of legal reform.
The Australian Divorce Transitions Project was set up in response to this and other gaps in current research. An important aspect of the Australian Divorce Transitions Survey, therefore, was to ask detailed questions concerning the nature of, value and distribution of property amongst divorcing women and men, the extent of financial and non-financial contributions made, and the financial needs of women and men post-separation and divorce. The answers to these questions will provide a clearer sense of the ways in which property is currently divided, and how trends in the division of property have developed, if at all, since earlier studies.
On the basis of the above considerations, the Australian Divorce Transitions Project data were analysed within the framework of the following research questions:
- What is the nature and value of the assets on separation of men and women?
- What share of property do men and women receive at settlement?
- What factors are associated with the division of property?
- What difference to the share of assets received would have been made if assets attributed to the period of marriage had been split equally?
The first question allows us to test the hypothesis that the majority of women and men who divorce have limited asset wealth with which to make adequate provision for the future financial needs of the respective parties. The second and third questions involve an examination of the share of property women and men receive, and the re-examination of the factors that were found to influence the nature of property settlement in Settling Up - that is, the extent to which the various contributions and needs specified by the Family Law Act, and other factors, contribute to the share of property received. The fourth question permits some predictions to be made about the potential effects on women and men of equal sharing of the matrimonial property on divorce.
Each research question is first addressed by presenting an average (or aggregate) picture of property division on divorce. This provides a broad-based view of property division in Australia. Conclusions drawn from this approach are based primarily on the circumstances of the majority of divorcing women and men rather than the minority who take property matters to trial. The findings derived from such an approach may thus be discordant with recognised advances in case law in regard to the assessment of contributions and future needs.
‘Aggregate’ information can, however, mask the widespread variability evidenced in property settlement outcomes (see McDonald, 1986b) and may reveal little about whether the distribution of property is consistent with policy goals or legislative intention for particular groups of women and men (Garrison, 1994). To address this limitation of the aggregate approach, each research question is also explored in relation to specific groups of women and men who report different levels of asset wealth at separation. This enables an assessment to be made of the extent to which trends in property division differ for those with substantial asset wealth on separation - the group most likely settle their property matters with court assistance - and those with limited asset wealth at separation - the group most likely to negotiate their settlement privately (Dewar, Sheehan & Hughes, 1999). Asset wealth also moderates the extent to which the s 75(2) factors can be relied upon to address the future financial needs of the respective spouses when dividing property.
The data presented in this working paper are drawn from the Australian Divorce Transitions Project, a stratified random national telephone survey of 650 divorced Australians who separated after January 1988, and who lived in all States and Territories except Western Australia.4 This survey, conducted in late 1997 by the Australian Institute of Family Studies, examined the divorce transition and its social and economic consequences for parents.
The project was designed to include mainly parents with children under the age of 18 years at separation, but also some older divorced people, regardless of whether or not they were parents (though about half of this group had at least one child under 18 years). Specifically, 513 parents (284 women, 229 men) had a child under 18 years of age at the time of separation, and 137 were older women and men (77 women, 60 men) from ‘long-term marriages’ — that is, they had been married for at a least 15 years duration, and the wife was aged between 45 and 65 years at separation. Though the status of respondents as parents was not a specific criterion for inclusion in the long-term marriage sample, it is noteworthy that half the respondents in this sample had at least one child under the age of 18 years at the time of separation. The older and younger samples were combined for the analysis presented in this research paper.5
In addressing the respective research questions, a series of core sub-samples were derived from the total sample described above with the on exception. This exception was that the complete sample of women and men described above was used to examine the types of assets couples own on divorce (Question 1). All other analyses reported in this paper are based on the three sub-samples described below.
First, to examine the value levels of asset wealth at separation (Question 1), all respondents who reported the dollar value of all asset items owned by themselves and their former spouse at the time of separation were included.
Second, to examine the share of property received (Question 2), and the factors that influence share received (Question 3), a smaller sub-sample of men and women were used in the analyses. These women and men included those who also: (a) reported the value of all asset items and the corresponding value of the share received by each party, and (b) had a child under the age of 18 years at the time of separation. Restricting this sub-sample to respondents with a child under 18 years at the time of separation ensures that, for each case, the welfare of the children and the future needs of the resident parent may have been considered when dividing the property, along with an assessment of any contributions made in the form of caring for the children of the marriage.
Third, to examine the effects on women and men of equal sharing of the matrimonial property on divorce (Question 4), ) a sub-sample of men and women who were married at an early age (i.e., the respondent was younger than 25 years at the time of marriage) and for whom this was their only marriage was used. The women and men included in this third sub-sample were also restricted to those who: (a) reported the value of all asset items and the corresponding value of the share received by each party, and (b) had a child under the age of 18 years at the time of separation. Restricting the sub-sample in this way ensures that, for each case, the property owned at separation is predominantly that which was acquired during the marriage.
These three sub-samples all differ from the total sample in terms of the gender breakdown of the respondents. Because women were less likely than men to recall detailed information on the assets of the marriage, particularly the value of their former spouse’s superannuation and the value of businesses and farms, there is a decrease in the proportion of women to men included in all analyses where knowledge of (or willingness to report) the value of assets is required. This gender difference may reflect differences in access to and knowledge of financial information during the marriage (Jordan, Redley & James, 1994). On the remaining demographic characteristics, the demographic profiles of the men and women included in these sub-samples do not differ substantially from that of the total sample. The demographic characteristics of the total sample are now described.
Appendix A Tables A.1 and A.2 present the demographic profile of female and male respondents. Appendix A Table A.1 shows that about 80 per cent of respondents were from the younger sample. As a result of stratified sampling, 63 per cent of respondents lived in urban centres, and around two-thirds lived in either Victoria or New South Wales. Most of the others lived in either Queensland or South Australia.
Women and men were of a similar age (the mean age of women was 43, and the mean age of men was 49 years), had been married for an average of 14 years, and had been separated for 6 years on average (see Appendix A: Table A.2). Both women and men were most likely to indicate that they had no post-secondary school qualifications (58 per cent vs 46 per cent). Women were less likely than men to report that they had received a diploma or vocational training (18 per cent vs 34 per cent), were less likely to be in paid work (68 per cent vs 78 per cent), and marginally more likely to indicate that they were tertiary graduates (24 per cent vs 20 per cent).
Women were also more likely than men to rely on social security as their main source of income (33 per cent vs 12 per cent), to have significantly lower personal and household incomes (for example, median personal annual gross income $20,000 vs $30,000), and to be single (71 per cent vs 58 per cent). These differences are consistent with prior research conducted by the Australian Institute of Family Studies (Weston, 1986; 1993).
The Australian Divorce Transitions Survey contained 12 broad sections: (1) screener questionnaire; (2) marital history; (3) household composition; (4) parenting arrangements (including residence, contact and child support); (5) property division; (6) spousal support; (7) education, training and work history; (8) income; (9) housing; (10) personal wellbeing; (11) personal relationships; and (12) demographic information.
Methodological problems and conceptual issues
As with most studies of divorce, our data were based on retrospective self-reports. The accuracy of the information is thus dependent not only on respondents’ candour, but on recollections of events that may have occurred many years before and at a time when respondents were under much stress.
Three more general methodological limitations should also be noted. First, while the survey design can detect associations (for example, between the share of property received and other factors), it cannot determine the direction of these associations. Thus no claim can be made that certain factors lead to specific property and financial outcomes.
Second, the unit of analysis was a spouse — not a couple — from a dissolved marital union; and only scant information was obtained about the respondent’s former spouse. As a consequence, there are limits to checking the accuracy of the data. This also means that we cannot directly determine whether participants took the former spouse’s financial needs into account when the property was divided. We are, however, able to estimate whether women’s financial needs were taken into account when dividing property by testing whether women’s reports of their financial needs post-separation predict the share of property they received. Similarly, an estimate of whether men’s financial needs were taken into account when dividing property can be gained by testing whether men’s reports of their financial needs post-separation predict the share of property they received.
Finally, since not everyone is accessible by telephone, the omission of certain groups of people in the population available through telephone surveys sets limits on the generalisations that can be made from the data to the Australian population at large. Among those who are often systematically excluded in such surveys are the very poor, those with unlisted numbers, those who live in geographically remote areas, and those who have hearing or English language difficulties.
4 The sample was stratified by gender and geographical location (urban vs rural). Western Australia was excluded due to some differences between the law on child-related issues in that State and the rest of Australia at the time the interviews were conducted.
5 The samples are not independent because respondents who met the criteria for both samples were allocated to the long-term marriage sample (that is, the harder-to-obtain and much smaller sample). For all intents and purposes, however, the samples, when combined, appear to form a random sample of parents who separated after January 1988 with a dependent child under 18 years old. Other Australian Divorce Transitions Project research (for example, Behrens & Smyth, 1999) has found this to be the case.
Question 1: What is the nature and value of assets on divorce
An important first step in the process of reviewing the current operation of the financial provisions of the Family Law Act is to examine the nature of the asset wealth of women and men who divorce; and the extent to which this wealth can be relied upon to ease the financial hardship associated with separation and divorce.
To assess the value of property owned at the time of separation, respondents were asked about each individual asset and associated liability that they and their former spouse had at the time of separation. Information was obtained on the value of each of the following assets and associated liabilities:
- Bank, building society and credit union accounts;
- Matrimonial home and mortgage;
- Furniture, cars, household equipment and amount owed on these;
- Superannuation policies (value at the time of separation);
- Life insurance policies (surrender value);
- Investments such as shares, bonds, debentures or other real estate and amount owed on these;
- Businesses or farms and related debts;
- Other assets with a value of $1,000 or more and the amounts owing on these assets (such as sporting and household equipment, caravans, boats, jewellery, musical instruments, paintings).
- Other liabilities (for example, non-asset related liabilities, such as personal or private loans, credit card debts).
On the basis of this information, the total net-value for all assets was derived. In addition, a number of distinctions were made between types of wealth. The net value of the basic assets of the marriage was calculated, following the approach adopted by McDonald (1986b: 173-174). Basic assets comprise those assets that the vast majority of people have, and that are used in day-to-day family life such as the family home, furniture and cars, bank accounts and non-asset related debts (such as credit card debts and personal or private loans). This distinction is based primarily on usage rather than on current practice in family law in distinguishing between assets for domestic use and other assets when dividing property.6 The non-basic assets comprise two different kinds of family wealth: (a) investments such as shares, bonds, debentures or other real estate, and businesses or farms; and (b) financial resources such as superannuation and life insurance.
Respondents were categorised according to the level of asset wealth of the couple at the time of separation. The 1997 social security non-home owner Pension Assets Test was used to assess the reported net asset wealth levels of the couple at the time of separation. As all calculations of assets include the value of couples’ net equity in their home, the test for all assets was used rather than the test that excludes the value for the owner-occupied home. This involved deriving the value of the couple’s total net assets excluding superannuation, as superannuation is excluded from calculation of the 1997 social security non-home owner Pension Assets Test. This value was then adjusted to 1997 dollars using the Consumer Price Index to determine whether the real value of assets was above or below the Asset Test cut off: $268, 500. The following three categories of asset wealth were then created: (a) the high asset wealth group where asset wealth was greater than the cut off for the assets test (that is, $268,500), (b) the medium asset wealth group with asset wealth valued at between $114,000 and $268,500, and (c) the low asset wealth group with asset wealth valued at below $114,000.7
Type of assets owned
Table 1.1 sets out the type of assets and liabilities owned by the couple at the time of separation.
|Type of asset or liability||%|
|Bank & credit union accounts a||81|
|Other basic assets b||46|
|Non-Basic assets and financial resources|
|Business or farms||24|
|Non-asset related debt c||34|
Notes: missing cases=53 (property division not finalised at the time of interview).
a Percentage of respondents with money (i.e., credit) in bank, building society or credit union accounts at the time of separation.
b Other assets valued at more than $1000 (such as sporting and household equipment, caravans, boats, jewellery, musical instruments, paintings, etc).
cNon-asset related debt includes personal loans, credit card debts and overdrafts.
A number of patterns evident in Table 1.1 are of note. The first is the predominance of superannuation. Around 81 per cent of all cases involved at least one superannuation policy (usually the husband’s). This represents a substantial increase on the rate of 55 per cent cited by McDonald (1986b). Such a finding is consistent with the shift in government policy during the late 1980s and 1990s towards compulsory superannuation, and represents a marked change in the composition of the family’s asset wealth, and in couples’ investment priorities (see also Dewar, Sheehan & Hughes, 1999). Aside from this increase in the importance of superannuation, the general nature of the assets owned by parties on separation and divorce appears to have remained consistent with the patterns of asset wealth identified in the early 1980s byMcDonald (1986b).
The type of the assets owned by parties at separation is dependent on a variety of factors, the most obvious of which is the wealth of the couple. Table 1.2 presents the assets and liabilities of the couple at separation for the three asset wealth groups.
|Type of asset or liability||Low Asset |
|Med Asset |
|High Asset |
|Bank & credit union accounts||68||81||88|
|Other basic assets||40||51||61|
|Non-Basic assets and financial resources|
|Business or farms||12||24||41|
|Non-asset related debt||42||35||30|
Notes: missing cases=261 (53 cases are missing because property division was not finalised at the time of interview, 203 cases are missing because incomplete information was provided on the value of asset items and 5 cases are missing because data collection was not complete).
* Wealth is defined as the net worth of the couple adding in the values of all assets and subtracting all debts (excluding the surrender values of superannuation at the time the property was divided).
Not surprisingly, women and men from high asset marriages, and to a lesser extent those from medium asset marriages, report ownership of a wider range of assets at separation than women and men from the low asset marriages. The main differences between the low asset group (46% of the sample) and the high asset group (21% of the sample) are that women and men from ‘low asset’ marriages rarely report ownership of investments such as real estate (other than the family home) and shares, businesses or farms. In contrast, just over half of the high asset group had investments at the time of separation and over one third (41%) reported equity in businesses or farms. Further, around half (58%) of the women and men from the low asset group report equity in the family home compared with the vast majority (86%) of those from the high asset group.
Value of assets owned
The reported net value of all assets owned at separation for the vast majority of respondents (80%) was below the 1997 Social Security Pensions Assets Test. The median value of net asset wealth as reported by women and men (excluding superannuation) was $124,101.8 These median property values accord reasonably well with findings from a recent study of cases finalised in the Family Court (Matruglio & McAllister, 1999). The median value of women’s superannuation at divorce was $5,590 compared with $22,361 for men. The median net dollar value of assets and liabilities of particular types are given in Table 1.3.
|Type of asset or liability||$||n|
|Bank, credit union accounts||$2,236||295|
|Furniture, cars & other assets||$28,373||389|
|Non-Basic assets and financial resources|
|Life insurance policies a||$10,461||89|
|Businesses or farms||$55,901||81|
|Non asset related debt||$3,638||143|
Notes: missing cases=261. All values are adjusted to 1997 dollars using the Consumer Price Index.
Only assets and liabilities with a non zero gross value are included in estimates (Excludes one case on computation of value of life insurance policies, one case on computation of value of non asset related debt and 91 cases in computation of value of funds held in bank, building society and credit union accounts).
a Represents the value of all policies held by the husband and the wife at the time of separation.
As McDonald (1986b) found, couples generally had only a very small fraction of their assets in liquid form (such as money in bank accounts), suggesting that on distribution, there was generally little ready cash available for either party to buy out the other party’s share of a particular asset, or to set up a second household. Table 1.3 also indicates that equity in the family home was by far the most valuable source of asset wealth at separation. However, for most divorcing couples there is also considerable debt remaining on the family home at the time of separation (i.e., 78 per cent of couples with equity in the family home had debt remaining on the family home at the time of separation; and for those who had such debt, it was worth, on average, 35 per cent of the estimated value of the family home).
The ability of parties to allocate their property in a way that meets the financial needs of all parties and preserves the family home for the children is dependent on both the value and range of asset wealth available at separation — characteristics of asset wealth that would by definition be most constrained for those women and men from low asset marriages. Table 1.4 presents the median dollar value of assets and liabilities of particular types for the three asset wealth groups.
|Type of asset or liability||Low asset ( n=178)||Med asset( n=131)||High asset( n=80)|
|Bank, credit union accounts||$1,118||$2,615||$5,575|
|Furniture, cars & other assets||$21,330||$33,448||$44,870|
|Non-Basic assets and financial resources|
|Life Insurance Policies||$3,864||$9,137||$27,293|
|Businesses or farms||-$2,012||$31,864||$131,236|
|Non asset related debt||$3,865||$3,199||$3,596|
Notes: missing cases=261.
Only assets and liabilities with a non zero gross value are included in estimates.
All values are adjusted to 1997 dollars using the Consumer Price Index.
* Wealth is defined as the net worth of the couple adding in the values of all assets and subtracting all debts (excluding the surrender values of superannuation assets at the time of asset division).
The data presented in Table 1.4 shows that, a large minority of women and men (those from low asset marriages) are very limited in the extent to which they can address the respective parties’ needs. This is because their asset wealth is primarily tied up in the family home and contents, cars, and in superannuation. Those in the low asset range have little or no equity in non-basic assets such as investments. In addition, of the 58 per cent of women and men from low asset marriages who report equity in the family home, the vast majority (90%) reported having money owing on the family home at the time of separation — debt that, on average, amounted to 50 per cent of the estimated value of the property at the time of separation. This composition of asset wealth — high levels of debt combined with limited wealth in non-basic assets — suggests that it would be difficult for these women and men to divide their assets in a way that would allow both parties access to immediate financial resources post-settlement, and secure the family home for the resident parent and children.
In contrast, for the high asset group (one in five of the women and men interviewed) the basic assets and superannuation account for around half of these couples’ total asset wealth and they have substantial equity in non-basic assets such as investments. In addition, of the 86 per cent of women and men from high asset marriages who reported having equity in the family home, 60 per cent had money owing on the house at the time of separation - debt that accounted for, on average only 20 per cent of the value of that property at the time of separation. This composition of wealth — low levels of debt on basic assets and greater wealth in non-basic assets — arguably gives these women and men a greater ability to take into account the financial needs of all parties and to preserve the family home on separation and divorce.
The findings suggest that around half the women and men interviewed reported asset wealth at the time of separation, the nature and value of which, when divided, may not be sufficient to both meet the immediate financial needs of all parties and the housing needs of dependent children. Nor can this asset wealth be relied upon to offset any longer-term financial hardship experienced by these parties post-separation and divorce; hardship that Weston and Smyth (2000) found to be considerable, particularly for sole mothers. Drawing on data from the Australian DivorceTransitions Project, Weston and Smyth (2000) found that, 44 per cent of sole mothers from short-term marriages through to 59 per cent of sole mothers from longer-term marriages (i.e., fifteen years or more) had household incomes below the poverty line some six years post-separation.
6 Mason J made a distinction between basic assets and non-basic assets in Mallet v Mallet (1984), however, it is not a distinction that is relied on by the Family Court in recent years. The Family Court generally deals with the assessment of contributions to property on a global basis not an asset-by-asset basis nor by clustering assets based on usage (Dickey 1997: 682-683).
7 The two 'low asset' groups were determined by a median split for those cases where assets were valued at less than $268,500.
8 The sample used to compute this value (n=389) includes 11 cases with a net shortfall on the total value of assets (excluding superannuation).
Question 3: What factors are associated with the division of property?
This section examines whether the variation in property settlements demonstrated above reflects the financial provisions of the Family Law Act. Using comparable measures to those used by McDonald in Settling Up (1986a), the extent to which contributions, future needs, and other factors not covered by the financial provisions, contributed to the share received is tested.
The following measures of contributions and future needs are designed to assess, where possible, the factors specified in the Family Law Act. Other factors measured and included in the analysis (such as "who made the decision to separate") are also described below.
Non-financial contribution to assets was assessed using the following measures. Respondents were asked who took responsibility for a series of domestic tasks during the marriage, including: childcare, cleaning, paying regular bills and household maintenance and improvements. Cases were classified into three groups based on whether responsibility for carrying out the domestic tasks was divided along traditional gender lines, non-traditional lines, or shared. Cases where the wife took primary responsibility for most tasks were considered 'traditional', as were cases where the wife took primary responsibility for child care and cleaning while the husband took primary responsibility for household maintenance and paying bills. Cases where the husband took primary responsibility for most tasks were considered 'non-traditional', as were cases where the husband took primary responsibility for child care and cleaning while the wife took primary responsibility for paying bills and household maintenance. Cases were categorised as ‘shared’ where responsibility for all household tasks was mixed or shared between the parties. These distinctions reflect the sex-role categories outlined in Antill and Cotton (1987) and in part follow research which indicates that childcare and cleaning are by far the more regular and time consuming tasks, and are typically the responsibility of women (Bittman 1995).
The time respondents spent out of paid work during the marriage to have and care for the children of the marriage, and the length of the marriage, were assessed as further measures of the ‘homemaker’ contribution. In combination these two particular measures are also related to the assessment of ‘future needs’ because women from long-term marriages can have spent an extended period of time out of the workforce thereby increasing their financial vulnerability post-separation and divorce (Funder, 1992; 1993).
The extent of financial contributions made to each asset was not directly assessed, however, a proxy measure for financial contribution to the asset pool as a whole was created: basic assets as a proportion of total asset wealth. This measure was originally derived by McDonald (1986b) who found that financial and non-financial contributions to basic assets such as the family home and contents are generally considered equal. Non-basic assets such as businesses, farms and investments were generally allocated to the party who contributed financially to their acquisition and improvement prior to and during the marriage (usually the husband). The result of this gendered pattern of ownership of non-basic assets was that the share to the wife fell in cases where non-basic assets made up a substantial proportion of the total asset pool (McDonald, 1986b).
The Family Court also makes this distinction in the allocation of property on divorce. In the average case, where parties have acquired what may be described as ordinary domestic assets during the course of their marriage (a house and contents, car and savings), and where the marriage has lasted for some time, the court will generally find that their respective contributions to their property was equal.18 Equality of contribution during marriage is not, however, generally assumed by the court in the case of non-basic assets such as businesses and farms where: a spouse’s related business activities involved the exercise of special skills, enterprise or expertise,19 the assets were acquired prior to the marriage or as an inheritance.
Section 75(2) factors
The s 75(2) factors were assessed using the following measures. Whether the respondent was the resident parent with primary responsibility for the care of a dependent child (or children) under the age of 18 years post-separation. The number of children of the marriage, and the age of the youngest child at the time of the separation, were also assessed.
The ability of the respondent to earn an income at the time of separation, and in the future, was measured by asking respondents whether they were in paid work at the time of separation, their age at separation, the highest level of education they had achieved and their most senior occupation. There may be cases where the highest level of education and occupation attained by the respondent at the time of interview bears little resemblance to their circumstances at the time of settlement. However, for the majority of cases these measures are good indicators of the respondent’s level of education and occupation at the time of separation.
Whether regular child support was paid or received, and whether the respondent had repartnered post-separation and divorce were also assessed. In relation to repartnering, there will be cases where repartnering occurred some time after the property matters were finalised and as such, was not considered by parties at the time of settlement.
Relationship context and other factors
In addition to the measures of ‘contribution’ and ‘future need’ outlined above, the ‘relationship context’ in which the negotiations about property took place was also assessed. The measures of relationship context include: who initiated the separation - a question previously shown to carry weight in the prediction of share received (McDonald, 1986b); and whether the respondent experienced physical violence during the marriage — a factor that can disadvantage the victim of violence when negotiating a settlement privately or through mediation (Astor, 1995; Neave, 1995).
Three other factors were also measured and included in the analysis. These include: whether or not the respondent was resident in the family home three months after the separation — a question previously shown to carry weight in the prediction of share received (McDonald, 1986b); the means by which agreement over asset division was reached or orders for distribution made (private vs registered or court ordered); and the extent of knowledge of family finances at the time of separation.
The ADTP data provided the opportunity to investigate the extent to which the observed variation in property division is related to the various factors outlined above. This is done first in an informal way through a bivariate examination of the mean shares received by the wife according to several characteristics of the respondent and of the marriage (Tables 3.1 to 3.3).
Second, a more formal approach is adopted in which the simultaneous effects of several variables are tested using analysis of variance with multiple classification analysis - the method of analysis adopted by McDonald (1986b). Many of the factors outlined above are associated with one another for example, the time spent out of paid work to have and care for children is related to the length of the marriage. This analytic approach allows the unique effects of each factor to be assessed while the effects of the other factors in the model are controlled. As a first step, the factors that were identified in bivariate analyses to have a significant association with share received were included in the following two sets of analyses:20 (1) an analysis of variance with multiple classification analysis of all the significant contributions factors; (2) an analysis of variance with multiple classification analysis of all the significant future needs factors. As a second step, the factors that were found to be significant in these two particular analyses were then combined for inclusion in a final multiple classification analysis. This final model provides information about the relative importance of each of the factors that were identified as having some influence on share received.
All analyses outlined above were run separately for women and men because the contribution and future need based factors relating to property division differ for women and men. The relationship context at separation may also differ for women and men (Jordan, 1996; Wolcott & Hughes, 1999). Appendix B lists the adjusted mean share received for the statistically significant predictors included in the respective analyses of variance with multiple classification analysis for women and men.
The analyses revealed the following patterns in the data.
The impact of the contributions factors is shown in Table 3.1.
|Factors||% Men |
|% Women |
|Contribution to household tasks|
|Time out of work during marriage|
|no time out of work||64||*|
|some time out of work||57||*|
|< one third of the marriage||*||50|
|one third of the marriage--> > one third of the marriage||*||41|
|Length of marriage|
|greater than or equal to 15 years||55||48|
|Basic assets as a proportion of total wealth|
Notes: A statistically significant difference between the levels of the factor in the mean share to the wife was found for: basic assets as a proportion of total wealth (rmen=.34,p<.001; rwomen=.34,p<.001), length of marriage for men (rmen=-.17,p<.05) and the time spent out of paid work during marriage for women (rwomen=-.31,p<.001). * Designates that the number of respondents in particular levels of this factor is too small to calculate and compare mean values for share to the wife. For example, no men reported being out of paid work for more than one third of the marriage, and no women reported a continuous work history during the marriage.
Men’s and women’s reports of their contribution to household tasks had little impact on the division. However, the proportion of time women spent out of paid work to have and care for children is closely associated with the division, with the share to the wife declining as the time out of work increases. This finding is surprising given that the wife’s extended withdrawal from the workforce to have and care for children is an important consideration in the court’s evaluation of the ‘homemaker’ contribution. Such a findings may suggest that the ‘homemaker’ contribution is undervalued by parties when they divide their property. Alternatively, the unexpected direction of this effect could be partly explained by the asset wealth of the couple. Women from high asset marriages, on average, spend a longer period of time out of the paid work force than women from low asset marriages, and, as demonstrated earlier, the greater the asset wealth of the marriage the lower the mean share to the wife.21
The length of the marriage, at least for men, is associated with the division. The longer the marriage the lower the share to the wife. This particular finding may also be attributed to the wealth of the couple - the longer the marriage the greater the wealth accumulated, and the greater the wealth of the marriage the lower the share to the wife.
The above two findings highlight the need to examine the influence of these particular measures of non-financial contribution while controlling for the measure of asset wealth. Such an analysis would help to clarify which of these particular factors is driving these two particular patterns in the data.
The strongest association is with the measure, ‘basic assets as a percentage of total wealth’. The higher the proportion of basic assets the greater the wife’s share. This concords well with McDonald’s (1986b) earlier finding, and is consistent with the data presented earlier in Figure 2.3. Both sources suggest that the share to the wife is comprised primarily of basic assets while the share to the husband is comprised primarily of non-basic assets. This finding suggests that husbands were generally regarded as having made a greater contribution to non-basic assets than wives. The possible reasons for this finding are, however, varied and are set out in some detail below.
Such a finding may suggest that non-financial contributions made to the non-basic assets of the marriage, particularly the domestic activities performed by the wife that frees the husband to work directly for financial reward, were undervalued or in some cases disregarded when the property was divided. This could happen if the homemaker contribution was undervalued by the judiciary (see Charlesworth & Ingleby, 1988; Graycar, 1995) and/or the parties themselves (see Funder, 1986a). It may also be a function of the practical difficulties involved in assessing and comparing contributions which are fundamentally different from one another.
Alternatively, such a finding may also reflect one or all of the following factors: (a) the significant weight given to husbands’ initial contributions of non-basic assets owned prior to the marriage; (b) the significant weighting given to husbands’ inheritance of non-basic assets such as businesses and farms; and (c) an additional weighting given to contributions in cases where the husband’s business activities involved the exercise of special skills, enterprise or expertise. In order to disentangle these possible explanations for this particular finding, a supplementary analysis was conducted which attempts to control for these alternative explanations.
Partial correlations were calculated between ‘basic assets as a proportion of total asset wealth’ and ‘share received’. These analyses were calculated using a sub-sample of men and women who were married at an early age (i.e., the respondent was younger than 25 years at the time of marriage) and for whom this was their only marriage. By using this sub-sample, the possibility that the husband had brought substantial non-basic asset wealth into the marriage is minimised. The possible influence of the husbands’ business activities and/ or inheritance of the family farm or business on the division was statistically controlled by partialling out the variation in share received attributable to the ownership of a business of farm. The ownership of other forms of non-basic asset wealth was not controlled for in this analysis because recent research indicates that, generally speaking, men and women in Australia are roughly equally likely to receive property in the form of a gift or inheritance (Mullins 2000). An exception to this is that family farms and other businesses have traditionally been passed on to sons (Mullins 2000). In summary, this partial correlation analysis controls, to the greatest extent that is possible using the ADTP data,22 the alternative explanations for the observed effect outlined above.
The association between ‘basic assets as a proportion of total wealth’ and ‘share received’ remained significant for both men’s and women’s reports when tested under these conditions.23 Although, for both men’s and women’s reports, the degree of this association was somewhat reduced. This finding lends further support to the argument that this particular finding may, in part, reflect a failure to fully recognise the wife’s non-financial contribution to the non-basic assets of the marriage.
Based on the findings discussed above from the bivariate analyses, two analyses of variance with multiple classification analysis were run. One was based on men’s reports and included the following factors: basic assets as a proportion of total asset wealth, the length of the marriage, and the asset wealth of the couple at separation. The other was based on women’s reports and included the following factors: basic assets as a proportion of total asset wealth, the proportion of time spent out of paid work during the marriage, and the asset wealth of the couple at separation.
The findings from these analyses suggest that when the effects of all other contribution factors are controlled for, only ‘basic assets as a proportion of total asset wealth’ remains a significant predictor of the division. The greater the portion of basic assets the greater the share to the wife. Conversely, the greater to portion of non-basic assets the greater the share to the husband (See Appendix B Table B.1 for the adjusted mean share received for the statistically significant predictors included in the respective contribution models for women and men).
Section 75(2) factors
The impact of the s 75(2) factors is shown in Table 3.2.
|Factors||% Men (n=114)||% Women (n=79)|
|Resident parent at separation 1|
|Number of children|
|three or more||65||43|
|Age of the youngest child at separation|
|< 5 years||69||47|
|5 — 11 years||60||44|
|12 years --> > 12 years||51||46|
|Employment status at separation|
|in paid work||*||48|
|not in paid work||*||36|
|Age at separation|
|< 30 years||72||43|
|30 — 39 years||63||44|
|greater than or equal to 40 years||59||46|
|no post-school education||64||43|
|has post-school education||61||47|
|Most senior occupation|
|professional or managerial||62||47|
|Child support paid or received 2|
Notes: A statistically significant difference between the levels of the factor in the mean share to the wife was found for: resident parent status for men (Fmen(1, 112)=15.19, p<.001), Child support paid or received for men (Fmen((1, 112)=6.31, p<.05), and age of the youngest child at separation for men (rmen=-23,p<.01).
* Designates that the number of respondents in particular levels of this factor is too small to calculate and compare mean values for share to the wife. For example there were only 9 women who reported being the non-resident parent, and only 10 men who reported being out of paid work at the time of separation.
1 Resident parent of at least one dependent child under the age of 18 years at the time of separation
2 Pay or receive any regular child support. In the sample, only 8 men received any regular child support and only 10 women paid any regular child support. Thus ‘yes’ for women means child support was received and ‘yes’ for men means that child support was paid.
Men who were resident parents post-separation reported that their wife received a lower share of property than did the majority of men who were non-resident parents. This shift in favour of resident fathers occurred even if other needs did not appear significant. For example, in Table 3.2, resident fathers reported receipt of 22 per cent more of the property than non-resident fathers even though the vast majority of these resident men had spent no time out of the work force during the marriage (76%) and were in paid work at the time of separation (89%). This particular finding suggests that the needs of the children are of paramount importance to parties when they divide their property. In practical terms, such a finding may mean that resident fathers kept the family home on divorce. For men from low asset marriages in particular, receiving the family home would almost certainly shift the share received in the husband’s favour.
The association between women’s reports of share received and residency status was not tested because the number of women in the sample who were non-resident parents was small (n=9). Consequently, a reliable statistical comparison between these two groups of women could not be made. However, women receive on average two thirds of the basic assets suggesting that their responsibility for the care of dependent children post-separation was taken into account when dividing property.
According to men’s reports, the age of the youngest child at separation is associated with the division, with the share to the wife increasing as the age of the youngest child decreases. This finding is not surprising given that the age of the children at separation is an important influence on women’s ability to re-enter the paid workforce — the younger the child more difficult it is for the resident parent to improve their financial situation post-separation (Baker, 2000). Once again, the direction of this effect could also be explained by the asset wealth of the couple. The youngest child of the marriage is, on average, older in the high asset marriages than in the low asset marriages;24 and, as demonstrated earlier, the lower the asset wealth of the marriage the greater the mean share to the wife. To further clarify the nature of this particular pattern in the data, the asset wealth of the couple at separation will be included in the analysis of variance with multiple classification analysis along with the measure: ‘age of youngest child at separation’.
According to men’s reports, payment of regular child support is closely associated with the share of property received. However, this effect was not replicated in women’s reports of share received, thus some caution is needed in interpreting this finding. Men who were currently paying regular child support reported that their wife received a higher share of property than did the men who were not currently paying regular child support. This effect is mostly likely related to the criteria for liability to pay child support. In this sample, men whose children were over 1825 and/or living independently from both parents26 at the time of interview were both over represented in the sample and less likely than other men to be paying child support. These criteria (ie, the child is over 18 years of age, the child is living independently of the parents) generally exclude non-resident parents from liability to pay child support. Children’s greater age and independence from parents are also factors that reduce the share to the wife because the needs of the children are not perceived to be as relevant when dividing the property in these cases.
Surprisingly, none of the future needs factors tested (such as paid workforce participation at the time of separation, or level of education) were associated with women’s reports of share received. Furthermore, very few of these women (n= 4) reported having received an alternative form of transfer of financial resources (that is, periodic spousal maintenance) in recognition of their future need (see Behrens & Smyth, 1999 for further details regarding the incidence, duration and amount of spousal maintenance paid). These findings suggest that future financial needs of the former spouse may, to some extent, have been overlooked by parties when allocating property on divorce
Based on the findings for men’s reports discussed above, an analysis of variance with multiple classification analysis was run that included the following factors found to be significant in the bivariate analyses: whether the respondent was the resident parent, the age of the youngest child at separation, whether child support was paid, and the total asset wealth of the couple at separation. An analysis of variance with multiple classification analysis was not run for women because none of the ‘future needs’ factors were associated with share received for women’s reports.
The findings from this analysis of men’s reports suggests that when the effects of all other ‘future need’ factors are controlled for, only the husband’s role as the resident parent remains a significant predictor of the division. Those men who were resident parents post-separation received a greater share of the assets than those men who were non-resident parents. (See Appendix B, Table B.2 for the adjusted mean share received for the statistically significant predictors included in the ‘future need’ model for men).
Relationship context and other factors
The impact of the relationship context and other factors is shown in Table 3.3.
|Factors||% Men |
|% Women |
|Who initiated the separation?|
|Violence in the marriage|
|Resident in the family home 3 months post-separation|
|Knowledge of family finances|
|Type of agreement|
|court-ordered or registered||59||42|
Notes: A statistically significant difference between the levels of the factor in the mean share to the wife was found for: resident in the family home 3 months post-separation for men (Fmen(1, 95)=20.88, p<.001).
The only factor that is significantly associated with share received is whether the husband was resident in the family home post-separation. The relationship context does appear to indirectly influence the share received through its impact on who stays or leaves the family home soon after separation. Specifically, men who reported having remained in the family home three months after separation received a greater share of the property than those who left — a finding that replicates the earlier research conducted by McDonald (1986b).
As McDonald (1986b) has argued, at first glance such a finding suggests that the person who has left the family home may concede, or the court may concede, that the occupant of the house cannot raise sufficient money to totally compensate the one who has left. The alternative explanation proposed by McDonald (1986b), and one that received empirical support in this analysis, is that departure from the family home is associated with having made the decision to end the marriage.27 Those women and men who initiate the separation, and consequently leave the matrimonial home, appear to relinquish a portion of the matrimonial property to their former spouse as a form of compensation in exchange for peace of mind and a ‘clean break’. This explanation is further supported by a finding from the final model discussed below, that a reduction in the share of property received by the husband who leaves occurs regardless of his status as a resident or nonresident parent.
Having experienced physical violence during the marriage was not associated with the share of property received. The single item measure of violence used in the present analysis was, however, insensitive to differing levels of abuse severity — an important moderating factor in the association between violence and share of property received (Sheehan & Smyth, 2000).
None of the ‘other’ factors tested appeared to influence men’s or women’s reports of share received. Specifically, consistent with McDonald’s (1986b) earlier findings, the type of property agreement (that is, private vs a registered or court ordered agreement) had no direct effect on the share of property received. There was no association found between the level of knowledge a respondent has of the family finances just before separation and share received.
Based on the findings from the analyses of the ‘contribution’, ‘future financial need’ and ‘relationship context’ factors specified above, a final analysis of variance with multiple classification analysis was run for men’s reports. This analysis included the following factors: basic assets as a proportion of total asset wealth, whether the former husband was the resident parent, and whether the husband was resident in the family home 3 months after the separation. A final model for women’s reports was not necessary because only one significant predictor of share received was identified from the multiple classification analyses for women (ie, basic assets as a proportion of total asset wealth).
The findings from this final analysis of men’s reports suggest that when the effects of these three factors on one another are controlled for, all three factors remain significant predictors of the division. The most influential of these three predictors was whether the husband remained in the family home post-separation (see Appendix B Table B.3 for the adjusted mean share received for the statistically significant predictors included in the final model for men).
The findings suggest that the observed variation in settlement outcomes is to some extent, consistent with the financial provisions in the Family Law Act 1975. Non-basic assets, such as investments, businesses, farms and superannuation, have a major impact on the share of property received suggesting that financial contributions to these particular assets carry great weight when property is divided. With regard to the ‘future needs’ factors, the findings suggest that the needs of children are of paramount importance in the division of property. However, the other ‘future needs’ factors — the future financial need of the former spouse in particular — appear to have little impact on the division.
The extent of the parties’ tangible property, contributions made and future needs, are not the only bargaining chips employed when parties divide their property. The findings suggest that even though ‘no-fault divorce’ has tended to permeate interpretation of the Family Law Act 1975 as a whole, a party’s perceived responsibility for the marriage ending continues to exert an influence on the way the property is divided. The party whose decision it was to leave the marriage, and who left the family home as a result of this decision, appears to pay a price in property for peace of mind.
18 See for example, Mallet v Mallet (1984) 156 CLR 605 at 625 (Mason J); and more recently In the Marriage of Doherty (1996) FLC 92-625 at 82,684.
19 See for example, In the Marriage of Ferraro (1992) 111 FLR 124 at 170, 173.
20 Three separate analyses were undertaken because of sample size problems associated with the inclusion of all listed factors in the one model at the same time. Too many variables in a statistical model relative to the number of respondents limits the extent to which it can be generalised to the population under examination (Tabachnik & Fidell, 1989).
21 r = -.13, p<.05.
22 Respondents were not asked questions about their financial contributions made prior to marriage or about those contributions made by others.
23 For the analysis of men's reports, the partial correlation is.38 (n=62, p<.01). For the analysis of womens's reports, the partial correlation is .30 (n=53, p<.05).
24 F women(2,75) = 5.24, p<.01; Fmen(2,111)=4.28, p<.01
25 45 per cent of men who were not paying child support did not have a child under 18 at the time of separation vs. 1 per cent of men who were paying child support (c2(1)=40.97, p<.0001, n=141).
26 26 per cent of men who were not paying child support had children who were living independently at the time of interview vs. 0 per cent of men who were paying child support (c2(3)=40.75, p<. 0001, n=141).
27 Women and men who reported initiating the final separation were less likely to have remained in the home post-separation than women and men whose former spouse initiated the final separation: c2(2)=13.8, p<.01.
Summary of findings
The chief findings of this research are as follows.
Nature and value of the assets on divorce
The asset wealth of a large minority is insufficient to meet the immediate and longer-term financial needs of both parties and the children on separation and divorce. In particular:
- For a large minority (46%) of women and men, the assets owned at separation consist primarily of ‘basic’ assets (such as the family home and contents, car(s), savings and private loans) and superannuation (usually the husband’s).
- In general the most valuable asset is the family home, followed by superannuation. Few couples had ready cash available at the time of settlement.
- The estimated median value of net asset wealth as reported by women and men (excluding superannuation) was $124,101. In addition, the median value of women’s superannuation at divorce was $5,590 compared with $22,361 for men.
- Respondents from ‘low asset’ marriages differ from those from ‘high asset’ marriages in that they are less likely to own non-basic assets; and to have equity in the family home.
Shares of property at distribution
The current discretionary system allows for substantial variation in settlement outcomes. In particular:
- In more than two thirds (79%) of all cases, the relative shares received by the respondents were different from a 40:60 division between parties.
- Despite this variation in share received, there is a high degree of consistency in the share of basic and of non-basic assets the wife receives. The wife receives on average two thirds of the couple’s basic assets and one fifth of the couple’s non-basic asset wealth.
- Respondents from ‘low asset’ marriages differ from those from ‘high asset’ marriages in that the wife is more likely to have received a majority share and there is less variation in settlement outcomes than for ‘high asset’ marriages. In dollar terms however, the relative value of the share to the wife is much less for women from ‘low asset’ marriages.
- The capacity of the share received to supplement the post-separation and divorce incomes of men and women from low asset marriages is constrained.
Factors of influence
The factors related to the financial provisions of the Family Law Act that predict share received are:
- The wife’s share of assets is reduced , and the husband’s share increased, in cases where non-basic assets (i.e., investments, businesses and farms) comprise a high proportion of the couple’s asset wealth.
- Both the husband’s and wife’s share of assets is increased in cases where they are the resident parent.
- Other factors not included in the financial provisions also predicted share received. In particular, the share to the husband increased when he remained in the family home post-separation.
Impact of equal share
The equal division of property acquired during marriage may both improve the position of women from ‘high asset’ marriages and disadvantage women from ‘low asset’ marriages. In particular:
- A 50:50 split produces an increase in the percentage share of assets received by the wife in ‘high asset’ marriages and a shift away from the wife in ‘low asset’ marriages.
- The shift in the dollar value of these assets is, however, marginal for women from ‘low asset’ marriages and substantial for women from ‘high asset’ marriages.
The findings provide up-to-date empirical data on the nature of women’s and men’s property at separation, and on the way in which it is currently divided. The core findings are now considered in more detail.
Financial contributions count
Consistent with the Settling Up findings, data from the Australian Divorce Transitions Project indicate that non-basic assets such as a businesses, farms and investments, and financial resources such as superannuation, were generally allocated to the husband. The result of this gendered pattern of allocation of non-basic assets is that the share to the wife falls in cases where non-basic assets make up a substantial proportion of the total asset pool. This finding suggests that husbands were generally regarded as having made a greater contribution to non-basic assets than wives.
There are a number of different reasons why this might be the case. For example, the allocation of non-basic asset wealth to the husband may reflect the significant weight given to husbands’ initial contributions of non-basic assets owned prior to the marriage, or the husbands’ inheritance of non-basic assets such as businesses and farms. Particularly in the case of those from high asset marriages, such a finding may suggest that additional weighting was given to the husbands’ contributions in cases where the husband’s business activities involved the exercise of special skills, enterprise or expertise. In regards to those from low asset marriages, where the family home and husband’s superannuation make up the bulk of the couple’s wealth, such a finding may simply reflect that the husband’s share comprised his superannuation only — an asset the Family Court is currently unable to divide at the time of divorce.
While each of these possible explanations may have played a role in the way parties’ allocated their property on divorce, it is not the complete story. The data suggests there is a further reason why non-basic assets are predominantly allocated to the husband, namely that non-financial contributions made to these assets, particularly the domestic activities performed by one spouse that free the other spouse to work directly for financial reward, may have been undervalued by parties when they divided the property.
The apparent under-recognition of women’s non-financial contributions to the non-basic asset wealth of the marriage is not, however, supported by empirical evidence of a reduction in the contribution women actually make. The entry of mothers in unprecedented numbers into the labour force over the past few decades has done little to alter the gender-based distribution of responsibility for work in the family home.
Surveys of how couples share household tasks continue to find that domestic chores are divided along a gender line (Bittman, 1995; Wolcott & Glezer, 1995). For example, married or partnered women who have children under 15 years and work full-time spend 22 per cent of their day (5.1 hours) on household and child care activities, while men in equivalent situations spend only 11 per cent of their day (2.5 hours) on such activities (ABS, 1993). Any observable change in these rates that may have taken place, argues Bittman (1995), are a function of women reducing their time spent performing household tasks rather than from men doing more. A recent estimate of the earnings that a woman forgoes as the result of taking on the role of homemaker and caring for children amounts to 28 per cent of her lifetime earnings or $200,000 for the birth of one child30 (Chapman et al. 1999). It is of note that only one quarter of the mothers in our sample received a share of the couple’s asset wealth to the value of at least $200,000. However, this is largely due to assets of this amount not being there in the first place.
In regard to the basic assets of the marriage, financial and non-financial contributions made to the acquisition and improvement of what are primarily domestic assets, such as the family home and furnishings, appear to have been considered equal by the parties, with the majority share of these assets going to the resident parent (usually the wife) in recognition of her and the children’s future financial needs. Thus, in the large minority of marriages where basic assets comprise close to the entirety of the couples’ asset wealth, the parties’ method of dividing property appears, in practice, to conform to the principle of equal contributions to the property of the marriage. The above patterns in dividing the basic and non-basic assets are evident across the asset wealth continuum, suggesting a surprisingly high degree of consistency amongst women and men in the ways they choose (or are directed) to divide their property.
In summary, the way women and men divide their property on divorce appears to have remained unchanged since the 1980s. The division of the non-basic assets of the marriage on the grounds of the parties’ respective contributions continues to reflect the principle of protecting individual property interests. However, in protecting these interests some parties may have failed to adequately recognise the non-financial contributions women make to the non-basic asset wealth of the marriage. In contrast, parties appear to have allocated their basic assets in a way that suggests that spouses were considered to have contributed equally to the acquisition and improvement of these assets.
As outlined earlier, after contributions, the second part of the property division equation is future needs. Here, the data are again consistent with Settling Up and confirm that, of the future needs factors tested, responsibility for the care of dependent children remains the most influential in predicting the share of property a party receives.
Further, the ‘future needs’ factors were not taken into account in a way that unduly favoured women at the expense of men — a criticism frequently directed at the Government by men’s rights groups in reference to property reform (Kaye & Tolmie, 1998). Irrespective of whether it was the former husband or former wife who was the resident parent, the share received shifted in favour of the resident parent. This occurred even if other needs did not appear significant (e.g., the resident parent had remained in the work force throughout the marriage and was in paid work at the time of separation), suggesting that the ‘future needs’ adjustment is driven by the needs of the children, not necessarily those of the former spouse. Such a finding is not surprising given the increasing legislative emphasis over the past decade on protecting the interests of the children of the marriage, the continuing responsibility of both parents to look after their children, and on reducing state costs in their upbringing when the marriage ends.
In contrast, responsibility for the future needs of the spouse (independent of concerns for the welfare of the children) had very little impact on the allocation of property on divorce. The length of the marriage, the extent of the wife’s involvement in paid work during the marriage and at the time of separation, and responsibilities taken for unpaid work in the home and the care of the children during the marriage, generally did little to increase her share of the property. Nor were the future needs of the wife taken into consideration via the payment of spousal maintenance. For the women and men interviewed ‘periodic spousal support [is]… rare, minimal and brief’ (Behrens & Smyth, 1999: 21), and was predominantly paid out as bridging-finance until the property matters were finalised, rather than as a form of ongoing financial support for the former wife (Behrens & Smyth, 1999).
These findings may reflect the practical difficulties faced by women and men in allocating their property in a way that satisfies the needs of all parties. The restricted nature of the wealth available for division in a large minority of marriages means that, once the family home has been secured for the use of the children and the resident parent, there is little left over to address the future needs of either party. Alternatively, these findings may, in part, reflect that notions of responsibility for the future needs of the spouse may be governed by a very different ideology - that of a ‘clean break’ and the cessation of any ongoing responsibility for one another’s welfare on divorce.
These findings are, however, at odds with the current financial circumstances of these women some six years post-separation. Drawing on data from the Australian Divorce Transitions Project, Weston and Smyth (2000) found that women are still more likely than men to experience financial hardship after divorce, and the hardship they experience is considerable. In particular, single older women from long-term marriages and sole mothers are the most likely groups to be classified as financially disadvantaged post-divorce regardless of the threshold of poverty adopted. Pathways taken out of financial hardship post-separation and divorce, such as repartnering, also remain elusive for these women. Hughes (2000), drawing on the Australian Divorce Transitions data, found that women with the primary responsibility for the care of young children, older women, and women and men with limited economic resources, are the least likely to have repartnered some six years after divorce.
Considered together these findings from the Australian Divorce Transitions Project (i.e., the data on property distribution presented in this paper, Hughes, 2000, and Weston & Smyth, 2000) indicate that the ‘feminisation of poverty’ post-separation and divorce remains an important issue for family law in Australia; and the adjustment parties make to their property interests in recognition of this financial need on the part of sole mothers, and women from long-term marriages, is currently inadequate.
Financial circumstances at separation
Unfortunately, a remedy for this shortfall in property received by women is dependent on two factors. The first is the extent of asset wealth available to the parties on divorce - wealth that for many is extremely limited; the second is the capacity of the former spouse to pay ongoing support to this spouse in addition to any ongoing financial commitments than he or she may have to their children, or to others, including families from previous or subsequent relationships.
The financial hardship experienced post-separation and divorce is for some a continuation of the ongoing financial hardship that characterised the marriage. Recent Australian research indicates that separation and divorce is more likely among couples experiencing financial hardship during their relationship as compared to others (Najman et al. 2000). This finding is consistent with longitudinal research from the United States, Finland and the United Kingdom which link economic stress with low marital satisfaction and reduced couple resilience to relationship breakdown (Boheim & Ermisch, 1999; Conger, Rueter, Elder, 1999; Kinnunen & Pulkkinen, 1998). Separation and divorce can thus both result in, and be a consequence of, financial hardship.
The greater incidence of divorce amongst those with a weak economic base is evidenced in the value and nature of asset wealth at separation of a large minority of the women and men interviewed. The median value of couples’ asset wealth at separation is well below the average value of assets for the general population of Australian couples for a comparable age cohort (i.e., a difference of around $100,000;31 see King & Lloyd, 1999). For a large minority of those interviewed this wealth is almost entirely concentrated in the family home and household goods, the family car and superannuation. The restricted nature of this wealth is consistent with King and Lloyd’s (1999) recent finding that ownership of non-basic assets such as non-pension stocks and bonds, and non-owner-occupied real estate, is highly concentrated. The majority of Australian households have little or no wealth in such assets, and a minority of households have a great deal.
When divided, asset wealth of this value and nature is clearly insufficient to meet the immediate financial needs of the respective parties. Nor can it be relied on to offset any longer-term financial hardship. This is particularly the case for women and men from low asset marriages for whom receiving a majority share of the basic or non-basic assets has a limited capacity to supplement their personal income. In fact, receiving a majority share of the basic assets of the marriage may even exacerbate financial hardship for these women, as the wife’s share is concentrated in the marital home, which is subject to significant mortgage obligation. While for men from low asset marriages, receiving a majority share of the non-basic assets may do little to meet their immediate housing and other day-to-day financial needs because their share is comprised mainly of superannuation.
In summary, the findings indicate that for a large minority of women and men the asset wealth available at separation limits the ability of s 75(2) to ensure an adequate property adjustment is made in recognition of the future needs of the former spouse. Thus, for many women addressing this financial need is dependent upon their seeking and obtaining periodic spousal maintenance — a remedy that is itself fraught with difficulties (see Behrens & Smyth, 1999).
Analysis of the data from the Australian Divorce Transitions Project suggests that little has changed since the publication of the Institute’s Settling Up in the way matrimonial property is divided. The way women and men divide their property on divorce primarily reflects financial contributions to the marriage, and concern for the future welfare of the children. To this end the principles that govern the division of property in Australia are consistent with the law. The future financial needs of the former spouse may, however, have been overlooked by parties when allocating property — a shortfall that, in part, reflects the constraints imposed by the limited wealth available to a large minority of couples on separation.
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Appendix A: Demographic profiles of divorced respondents
|State / Territory|
|City * (including ACT)||216||63||174||63|
|Country (excluding NT/TAS)||128||37||104||37|
|No post-secondary school||209||58||132||46|
|In paid work||246||68||225||78|
|Not in paid work #||114||32||64||22|
|Main source of income|
|Not a DSS recipient||238||67||245||88|
Notes. * Major metropolitan cities were defined in line with Australian Bureau of Statistics Statistical Divisions;
# includes those looking for work.
|Years of marriage||13.00||13.97||7.83||13.00||13.96||8.18|
|No. of years since separation||6.00||5.84||2.29||6.00||5.93||2.26|
|Personal gross income||$20,000||$23,328||$15,467||$30,000||$37,622||$50,583|
|Household gross income||$26,250||$34,252||25,775||$40,000||$49,508||$55,307|
First and foremost, we would like to thank the hundreds of respondents who volunteered much personal information about themselves, their property, and their post-divorce circumstances. Most respondents did so in the hope that this information would make a difference to the lives of others.
We would also like to acknowledge the late Dr Kathleen Funder, who was responsible for the conceptualisation and development of the Australian Divorce Transitions Project, on which this study is based.
We are indebted to Patrick Parkinson and Ruth Weston for their comments on drafts of this paper. Several Institute colleagues also provided useful criticism and encouragement, particularly Belinda Fehlberg and David Stanton, and we are also grateful to Bruce Smyth for his contribution to the methods section. We, of course, take full responsibility for any shortcomings in the paper.
Sheehan, G., & Hughes, J. (2001). Division of matrimonial property in Australia (Research Paper No. 25). Melbourne: Australian Institute of Family Studies.
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