What is at Stake Here? Defining Property in Divorce

Assets, liabilities and what gets divided: There is a lot to be concerned about when separation and divorce strike a relationship. This is because of the nature of marriages and de facto relationships, where two people operate as one in many respects, with a high degree of trust and shared ownership. When the bubble bursts, the fallout extends far beyond emotions—it impacts every part of the couple’s life.

Divorce statistics are often expressed in divorces per 1,000 people. In 2023, there were 48,700 divorces in Australia, at a rate of more than two per 1,000 people. While that doesn’t give us an exact percentage (roughly 30–40% of marriages break down), it shows how common the issue of dividing assets has become. And when you include de facto relationships, the true number is even higher.

The point is: while all separations and divorces are emotionally challenging, they are a fact of life. Each one involves some degree of asset division, which can complicate the process.

What is an Asset?

In everyday terms, an asset is something—or someone—useful. In legal and financial terms, it’s anything of value that can be sold or used to calculate net worth. When someone says they’ve made their first million, it typically means their total assets (property, cars, investments, etc.) are worth that much—not that they have a million dollars in the bank.

Assets can include artwork, jewellery, insurance policies, superannuation, shares, and more.

What is a Liability?

Commonly, a liability refers to a potential problem or burden. In legal terms, it’s a financial obligation—something you owe. Insurance, for example, exists to protect against liability in case of damage or injury. Liabilities can also include debts, loans, or future payments owed.

Liabilities become particularly relevant during divorce if the couple owns a business or shares financial commitments. While both parties may want a fair share of the assets, few want to take on the liabilities.

The Property That Means Buildings and Land

While property can refer to a range of assets, real estate often carries the most financial weight. Questions like “Who gets the house?” can become highly contested. If neither party wants to keep it, selling and dividing profits is common. But complexities arise when one party contributed more financially—whether via deposit or mortgage payments. What was once a mutual agreement might now be subject to scrutiny and dispute.

When Children and Animals Are Involved

Children shift the lens through which asset division is viewed. While they are not considered assets, they influence decisions around housing, financial stability, and inheritance. The court considers their well-being above all.

Pets, too, can trigger disputes that go beyond financial value. Emotional attachments may lead to disagreements over custody, especially if both parties feel strongly.

Furniture, Heirlooms, and Art

This is where the emotional and financial merge. Items like antique cutlery or inherited artworks can spark heated debates. Ownership might be murky, and sentimental value often complicates matters. What was once jointly enjoyed now becomes subject to conflicting claims.

How to Influence How Assets Are Divided

The most effective way to protect your interests is through a Binding Financial Agreement (BFA)—commonly known as a prenuptial agreement. This document outlines how assets and liabilities will be handled in the event of separation. It’s best created before a marriage or de facto relationship begins, but can also be drawn up during the relationship.

While some see BFAs as unromantic, they can prevent future disputes and legal costs. They are akin to life insurance: not because you expect something to go wrong, but because being prepared makes sense.

Changes in circumstance—such as one partner experiencing financial success—can also prompt a BFA later in the relationship. Again, maturity and honesty are essential.

If you're concerned about issues like an ex-husband delaying property settlement, or you want to understand the property settlement process in NSW in divorce cases, speak with an experienced family law expert.

Even if your relationship has already ended, it’s not too late to create a BFA. While it would have been preferable earlier, a post-separation agreement can still reduce legal stress and help you define what counts as an asset—and who it should benefit.