The Treatment of Post Separation Assets

The Treatment of Post Separation Assets

A common question in property settlement matters is whether property acquired or improved by one party following separation is available for division between both the parties.

Normal logic would suggest that whatever people do with their money and their efforts after they separate (including whether they have received a windfall, such as a lottery winning or an inheritance) should be their own business and nothing to do with their former spouse. Whilst the end result often follows this logic, it is by no means a certainty and there is often some tortuous reasoning involved in between.

The first certainty is that all property existing at the date of trial is divisible between the parties. Therefore any property acquired by whatever means after separation is included in the pool, even if it was inherited from family or bought in conjunction with a new spouse. The determining factor is, however, who contributed the property.

The answer to whether the Court should treat the after-acquired property separately as if in a different pool of property, whether it should be treated the same as all other property to be divided, or whether something in between, is at the discretion of the judge.

What would you think should be the outcome of each of these scenarios?

  • 4 years after you separate from your spouse, you receive an inheritance of $400,000;
  • You were married for 8 years before separating;
  • Your total property pool including the inheritance is $1.3m, so the inheritance is about 32% of the total pool;
  • Excluding the inheritance your contributions to the assets of the marriage were equal.

In circumstances like this the Full Family Court in Calvin v McTier [2017] FamCAFC said the most important thing the parties must remember is that the Court has a discretion as to how to treat the after-acquired property (inheritance). Whether treating it as totally separate, or including it and then adjusting the contributions, the final assessment is for the Court to determine.

As it turned out the Court included the $400,000 but then raised the husband’s contributions by 25% (not a full 32%) and this was found on appeal to be acceptable procedure. The message for us is not to treat after-acquired property as an asset to be excluded from the property settlement process.  It’s all up for grabs until the Court exercises its discretion as it did in the above case.

For further information regarding property settlement issues, contact the family law team at CLO Lawyers on (07) 4631 9000.