Dividing property between you and your ex-partner can be a difficult task for many reasons. One of the common questions is how contributions made after separation are treated in family law property settlements.
Contributions after separation could be home loan repayments for a jointly owned property or a gift or inheritance received by one party or caring for a child of the relationship.
If you have separated from your ex-partner, you may wonder whether the contributions you have made after separation will be quarantined (if they take the form of an asset) or credited in your favour during the property settlement process.
In this article we explore some of the key factors which go into an assessment of post-separation contributions.
How the Court Assesses a Property Settlement
Under the Family Law Act, division of property after a relationship breaks down involves a four-stage process:
- Identifying the assets, liabilities and superannuation at the current date, whether in your name, your ex-partner’s name or held jointly;
- Identifying and assessing the contributions made by each party to those assets at the start of cohabitation, during the relationship and after separation;
- Assessing the current and future circumstances of the parties, including age, health, income earning capacity and the care of children; and
- Determining what factors need to be taken into account to result in a just and equitable property settlement in all of the circumstances.
You can find out about the four-stage process and property settlements here.
Contributions
The Court recognises contributions can be made in different forms, either directly or indirectly. These include:
- Financial contributions to the acquisition, conservation and improvement of property (for example, saving a deposit to purchase a home).
- Non-financial contributions to the acquisition, conservation and improvement of property (for example, undertaking renovations to a property using your own labour).
- Contributions to the welfare of the family (also known as homemaker/parent contributions).
The Court will also consider the effect of any family violence on a parties’ ability to make these kinds of contributions to a relationship if this is a relevant issue.
While most cases focus on each party’s financial circumstances at the beginning of the relationship and all forms of contributions during the relationship, in some cases, contributions made between the date of separation and the date of settlement or Court determination can also be relevant.
How the Court Deals with Post-Separation Contributions
When determining property settlement entitlements, the Court looks at the assets, liabilities and superannuation in existence at the time of settlement or trial, not as at the date that the parties separated. This means that:
- Assets that have been acquired since separation or the increase in value of existing assets since separation are generally included in the asset pool.
- The Court will not automatically exclude or quarantine those assets from the settlement. Instead, the Court will consider what contribution, if any, each party has made to those assets, and whether any adjustments to the parties’ property interests should be made as a result.
For example:
- A property purchased after separation using joint funds may be treated as a shared contribution.
- An inheritance received by one party after separation may lead to a contribution adjustment in that party’s favour.
- The increase in the value of an existing asset after separation due to market forces are usually treated differently to increases due to the efforts of one party.
Often, one or both parties will continue to contribute to a joint property (such as the family home) after separation if they have the capacity to do so. The weight given to these contributions will depend on:
- The duration and value of these contributions.
- Whether the contributing party continued to live in the home.
- Whether the contributing party received other benefits (such as tax advantages).
- Whether the other party made non-financial or parenting contributions during the same period.
The Court has discretion when determining the weight to be given to post-separation contributions to achieve a just and equitable outcome, so there is no one size fits all answer to this question.
Assessing post-separation contributions can be complex and it can have a significant impact on the outcome of a property settlement, so it is essential to seek legal advice about this early. If you would like to discuss your family law property matter in more detail, please contact our office.
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Article By: Bronwyn Montgomery
Family Lawyer Melbourne
Bronwyn has experience in a range of parenting and property matters, including complex and high conflict matters. She is also experienced in family violence, surrogacy, donor, and Hague Convention matters. Bronwyn aims to empower her clients with the tools to achieve their best outcome, whether this be outside the Court system or during litigation.