Family Law settlement includes assets acquired post-separation
The recent Full Court decision in Calvin & McTier affirmed the Court’s power to divide and/or include for division assets acquired after the parties have separated.
It is a common misconception that property settlements only extend to assets acquired during the course of a relationship. The recent Full Court decision in Calvin & McTier [2017] FamCAFC 125 confirms that this is not the case and affirmed the Court’s power to divide and/or include for division assets acquired after the parties have separated.
In the case, the Husband received an inheritance, four years after separation, from his late father’s estate. The value of the Husband’s inheritance for the purpose of family law proceedings (being the balance remaining at Trial) represented approximately 32% of the total pool of assets of the parties. The Husband appealed against the Trial Magistrates decision to include his inheritance in the pool of assets to be divided between the parties as it was not an asset borne of the relationship.
At first instance, the Trial Magistrate held that “there is no question that the overwhelming financial contribution post separation into what I have found to be the current net assets and financial resources, has been the inheritance received by the (Husband) from his late father”, leading to an assessment of the Husband’s contributions at 75% and those of the Wife at 25%. The Court was satisfied that the Wife should receive an adjustment of 10%, to reflect the disparity in the parties’ income and earning capacity and as a result, the Wife retained an overall settlement as to 35% of the total net assets (including the inheritance).
The Husband appealed the Magistrate’s above decision on the ground that there was an insufficient connection between the inheritance and the parties’ marriage or any circumstances arising from the parties’ matrimonial relationship, such that the inheritance was not property that should have been included for division. In dismissing the Husband’s appeal (and ordering that the Husband pay the Wife’s costs), the Full Court confirmed, “that the Court retains a discretion as to how to approach the treatment of after-acquired property. The Trial Magistrate could have included the inheritance amongst the property to be divided or dealt with it separately”.
An inheritance is just one example of an asset which may be acquired after separation. Other post-separation assets might include a windfall gain, such as lottery winnings, a redundancy, savings accrued from post-separation earnings, investments including shares, a business interest or real property. It is clear that the Court’s power extends to all assets of the parties (or either of them) that exist at the time of the hearing before the Court, regardless of when those assets were acquired.
The inclusion of post-separation assets may be tempered by the Court’s assessment of the parties’ contributions. The Court must take into account the parties’ contributions toward the acquisition, maintenance and improvement of the total asset pool of the parties as well as their non-financial contributions as parent and homemaker, all of which can and often do continue well beyond separation.
Parties are usually keen to settle their property matters quickly. However, disputes between them about interim issue such as discovery (the exchange of relevant financial documents) or valuations (i.e. the market value of real property assets, businesses interests, etc.) or the substantive terms of settlement can result in delay. Further, the Court process can be frustratingly slow and it may be many months before a case is finally determined.
Understanding that assets acquired after separation may be, and often are, included in the total pool of assets for division will assist parties to make informed decisions about how they wish to progress their matter, the terms upon which they might be prepared to reach a final property settlement and how they will manage their financial affairs in the period between separation and settlement.
If you require advice or representation in relation to your property settlement, please do not hesitate to a member of our Family Law team.
