There have been recent decisions by the High Court and now by the Full Court of the Family Court that make it imperative for separating couples to address financial issues, and in particular, the security of their financial interests immediately after separation.
The concept of what was known as “notional property” seems to be under threat. The concept of notional property always provided some comfort to separating spouses as it would allow the Court to notionally “add back” property that had been dissipated or wasted by one party after separation.
This would ensure, that the other party was not unfairly penalised for the unilateral spending by the other party immediately after separation.
For example, assume that one party spent $50,000.00 on buying a gift for their new love interest. The other spouse could argue that the $50,000.00 was wasted and should be added back into the matrimonial assets available for division. This would ensure that this spouse was not unfairly treated by the unilateral spending by the other spouse after separation.
The Law now is unclear. There is a real risk, that such reckless and unilateral spending after separation will not result in those assets being “notionally added back” to the pool of assets. While there will be still strong arguments to make percentage adjustments in favour of the disadvantaged spouse, the reality may be that one spouse is unfairly disadvantaged because of the unilateral spending by the other spouse immediately after separation.
Therefore, it is imperative immediately after separation that one seeks urgent advice from their accountant/financial advisor and their family lawyer so as to immediately protect their assets from such premature and unilateral dissipation.
It is incumbent upon professional advisors, including family law specialists, to turn their mind at an early stage to preserving matrimonial assets and not allow one party to be at risk due to another’s post separation conduct.
Always remember, that it is the assets and their value at the date of settlement that are taken into account by the Court and not the assets and their values at the date of separation.
Contact us if you are separating and have concerns about the division of your assets and what you are genuinely entitled to. Our Family Law experts have extensive experience in dealing with complex property settlement matters.