When a relationship breaks down and a couple go their separate ways, there are lots of things for them to consider and rearrange as they move into their new lives. 

One of the most complex processes will involve the division of the financial affairs and property owned together during the relationship. This can be a complex area of law, where even the definition of “property” may not tally with the layman’s idea of what is theirs to be divided.

So… what constitutes “property” in family law matters?

Section 4(1) of the Family Law Act 1975 defines “property” as:

“(a) in relation to the parties to a marriage or either of them — means property to which those parties are, or that party is, as the case may be, entitled, whether in possession or reversion; or

(b) in relation to the parties to a de facto relationship or either of them — means property to which those parties are, or that party is, as the case may be, entitled whether in possession or in reversion.”

Some things fall neatly into the everyday definition of property, including things like real estate, bank accounts, shares, cars and personal items, and all property of the parties is included, whether “business” related or “matrimonial” property. However what about inheritances, money that has been “wasted” by one party, money spent on legal costs?

An inheritance may or may not be included in the pool of assets, depending on the length of the relationship, the timing of the inheritance, and the contributions of the parties to the relationship, both monetary and otherwise. It can sometimes be “quarantined” by the court and looked at separately from other assets of the couple. If you are expecting to receive an inheritance but have not yet become entitled to it, it is unlikely to be included as a matrimonial asset but may be looked at as a “financial resource”.

In one case, a lotto win by one party after separation but before finalisation of the couple’s finances, was deemed to be an asset of the relationship due to the contributions during the relationship of the non-winning spouse, and taking into account that there were no other assets of the relationship (Farmer & Bramley (2000) FLC).

A party’s interest under a trust can be treated as property by the Family court, depending on the nature of the trust and the degree of control of it by that party. 

Income of one of the parties is not property, but a business partnership interest might be, depending on the circumstances. A capacity to borrow money is not property but it may be a factor in deciding how property is to be divided between the parties. Money received (or anticipated) for damages as the result of a court action may be included in a property pool, although the bare right to sue someone is not. An entitlement to long service leave is not property unless a capital sum has already been received in lieu of actual leave. Similarly, a redundancy payment is not property unless the capital sum has already been received.

There are many other situations in a family law matter in which property that you think is there for distribution is actually not – it is important to consult a specialist Family Lawyer as early as possible to ensure your interests are protected and the settlement you get with your ex-spouse is fair. Please feel free to contact us at O’Brien, Connors & Kennett