Post-Separation Contributions in Family Law Property Settlements

When a relationship breaks down, dividing property between you and your former partner can be one of the most challenging aspects of separation.

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A common question people ask is how contributions made after separation are treated in a family law property settlement. For example, what happens if you continue paying the mortgage on the former family home, receive an inheritance, or take on the primary care of the children after separation?

In Australian family law, post-separation contributions can play an important role in determining how property is ultimately divided.

This article explains how the Court considers post-separation contributions and how they may affect your property settlement.

What Are Post-Separation Contributions?

Post-separation contributions are financial, non-financial and/or parenting/homemaker contributions made by one or both parties after the relationship has ended but before the property settlement is finalised.

Common examples include:

• Continuing to repay a mortgage on a jointly owned property
• Maintaining or improving property after separation
• Receiving an inheritance or financial gift
• Purchasing assets after separation
• Providing primary care for children
• Paying household expenses or other joint liabilities

Whether and how these contributions are recognised will depend on the circumstances of each case.

How Property Settlements Are Determined in Australian Family Law

The Court may make property or financial orders in relation to marriages or de facto relationships.

Before making any order related to property, the Court must first satisfy itself that it is just and equitable to alter the parties existing interests. Common scenarios where the Court may consider it appropriate to alter the parties existing interests include but are not limited to

• where there are joint assets and/or liabilities;
• where there are children of the relationship; and/or
• if not making a property order would result in a serious injustice (say for example, if one person has made significant contributions to the property of the other).

Under the Family Law Act, the Court typically follows a four-step process when determining a property settlement.

1. Identifying and valuing the Property Pool available for division

The Court identifies and values the parties’ current assets, liabilities and superannuation interests as well as identifying any financial resources at the time of settlement or trial.

This may include:

• Real estate
• Bank accounts
• Investments
• Businesses
• Vehicles
• Superannuation
• Debts and liabilities

Importantly, the parties’ property, liabilities and superannuation interests are assessed at the current date, not the date of separation.

2. Assessing Each Party’s Contributions

The Court then considers the contributions made by each party throughout the relationship, including contributions made:

• Before the relationship
• During the relationship
• After separation

Contributions are generally grouped into three categories.

Financial Contributions

These involve direct or indirect financial input by or on behalf of a party toward acquiring, conserving or improving assets.
Examples include income, mortgage repayments, or contributing funds to purchase property.

Non-Financial Contributions

These include work or labour by or on behalf of a party that that contributes to the acquisition, conservation or improvement of any property of the parties.
For example, undertaking renovations or assisting in a family business.

Contributions to the Welfare of the Family

Also known as homemaker and parenting contributions, such as caring for children or maintaining the household through cleaning and cooking.

The Court may also consider the impact of family violence on a party’s ability to contribute to the relationship.

3. Considering Current and Future Circumstances

The Court assesses each party’s current and future circumstances, including:

• The effect of any family violence on the current and future circumstances of the other party
• age and health
• income and earning capacity
• care of children
• financial resources available to each party.

4. Determining a Just and Equitable Outcome

Finally, the Court determines whether the proposed property division is just and equitable in all the circumstances.

How the Court Treats Post-Separation Contributions

Because the property pool available for division is assessed at the time of settlement, assets acquired after separation or assets that have increased in value since separation, are generally still included in the property pool.

However, the Court will consider who contributed to those assets after separation when determining how they should be divided.

Importantly, post-separation assets are not automatically excluded or “quarantined.” Instead, the Court assesses whether adjustments should be made to reflect each party’s contributions.

Examples of Post-Separation Contributions

Some common examples include:

Mortgage Repayments After Separation

If one party continues to make mortgage repayments on the former family home after separation, the Court may recognise this as an additional financial contribution. However, the Court may also consider whether that party continued living in the property and received the benefit of exclusive use.

Inheritances Received After Separation

If one party receives an inheritance after separation, the Court may treat the inheritance as a significant financial contribution by the party receiving the inheritance. How an inheritance will be treated will depend on the broader circumstances of the case such as when the inheritance was received, the size relative to the other assets in the property pool available for division, whether the inheritance was intermingled with joint assets, if the inheritance has been spent and if so, what it was spent on and the length of the relationship.

Increase in Property Value

If property increases in value after separation, the Court may consider why the increase occurred before making some kind of adjustment.

For example:

• If the increase was due to shifts in the property market, it may be shared between the parties.
• If the increase resulted from the efforts or financial contributions of one party, the Court may give greater weight to that party’s contribution.

Factors the Court May Consider

When assessing post-separation contributions, the Court may consider:

• The length of time between separation and settlement
• The size and significance of the contributions
• Whether the contributing party lived in the property
• Whether the contributing party received financial benefits as a part of the contribution (such as tax advantages)
• Whether the other party made parenting or homemaking contributions during the same period.

Because family law property matters are highly fact-specific, there is no universal formula for how post-separation contributions are treated.

It is also important to note that there is usually no automatic dollar for dollar reimbursement of financial contributions made.

Getting Advice About Property Settlements

Post-separation contributions can significantly affect the outcome of a family law property settlement.

Obtaining legal advice early can help you understand:

• how your contributions may be recognised
• what evidence you should keep
• how to protect your financial interests following separation.

If you would like advice about property division after separation, our experienced family lawyers can help. Please do not hesitate to contact our office to book an appointment.