Life, financially or otherwise, does not go into a state of animated suspension after separation and pending property settlement. In fact, in most cases, parties’ financial circumstances constantly change and will be different at time of separation and when orders are made.
So what happens when one party acquires assets post separation and improves their financial position significantly, and will it be shared with the other party as part of property settlement.
Generally, the short answer is, family law property settlement includes assets acquired post separation. Contrary to common misconceptions, the court is not restricted to dealing with assets in existence as at the date of separation. All property and assets in existence at the time of trial, whether acquired prior or after separation, need to be identified and assessed.
In the recent case of Calvin & McTier (2017) FLC 93-791, the husband acquired a substantial inheritance, four years after separation. The husband’s inheritance represented approximately 32% of the overall net asset pool. The parties were in a relationship for 8 years and had 1 child together. The care of the child was shared equally between the parties. The husband had also brought significantly more assets into the relationship than the wife.
At trial, the Judge determined that the inheritance received by the husband should be included among the assets to be divided between the parties, and awarded the husband 65% and the wife 35% by way of property settlement.
The husband appealed. He argued that the trial Judge had erred by including his inheritance in the pool of assets to be divided between the parties as there was insufficient connection between the inheritance and the parties’ marriage. The Full Court of the Family Court rejected that argument and found that the court retains a wide ranging discretion as to how to approach the treatment of property acquired after separation, and could include the inheritance as an asset available for division, even if 4 years had lapsed between separation and the receipt of the inheritance.
This case highlights the importance of settling property and financial matters as soon as possible and the risks associated with postponing property settlement. For the husband in this case, it meant he had to share a significant part of his inheritance with the wife. An inheritance is also just but one example of an asset that can be acquired post separation. Other examples, include redundancy payments, personal injury claim settlements, income, superannuation, shares, business interests and real property.
As a general rule, once final orders have been made, assets and financial resources acquired after orders are made, cannot be susceptible to a claim in the family law courts.