INITIAL AND POST SEPARATION CONTRIBUTIONS
CALCULATING PROPERTY SETTLEMENT
When calculating the distribution for property settlement, the court considers the contributions made by each party to the acquisition, conservation and improvement of the property pool.
This includes consideration of the initial contributions made by each party at the commencement of the relationship, and what adjustment should be given (if any) to the party that made the contribution in recognition thereof.
INITIAL CONTRIBUTIONS
Each case will be determined on its merits; however, the court generally places emphasis on which party made the larger contribution at the beginning of the relationship. This is particularly true where the contribution was used as a ‘springboard’ to increase the property pool and the wealth of the parties. For example:
- If, at the beginning of the relationship, one party had a business and this business became successful and was the parties’ main source of income throughout the relationship, the party who made that contribution might receive an adjustment in their favour.
- If, at the beginning of the relationship, one party had a property and the equity in that property was used to purchase the matrimonial home which comprises the majority of the property pool at the time of separation, the party who made that contribution might receive an adjustment in their favour.
If you would like to discuss what you could potentially be entitled to due to initial contributions to the relationship, please do not hesitate to contact our experienced family law team.
DOES PROPORTION MATTER?
Yes. If the contribution made by one party at the beginning of the relationship still comprises a majority of the property pool at the date of separation, it is possible that the party who brought that asset into the relationship will receive an adjustment in their favour to account for this.
For example, if one party had a property at the beginning of the relationship and that same property is the only asset remaining at the date of separation, then it is likely that an adjustment will be made in favour of the contributor to account for his/her contribution.
For more information about contributions, or to set up a free initial consultation to see one of our family lawyers in Gold Coast and Sydney, please contact Ramsden Lawyers on 1300 749 709.
IS THE LENGTH OF RELATIONSHIP RELEVANT?
The weight given to the disparity between each of the parties’ respective initial contributions will normally diminish as the relationships gets longer.
Generally speaking:
- A short relationship is less than 5 years (where contributions at the beginning of the relationship will be very relevant to what each party will receive);
- An ‘arguable’ middle-range is 5 to 10 years (where contributions at the beginning of the relationship are arguably still relevant); and
- A long relationship is greater than 10 years (where contributions at the beginning of the relationship tend to lose their relevance).
The importance of an initial contribution made by one party does not diminish as a result of the passage of time. Instead, it diminishes as a result of the offsetting of contributions made by each of the parties throughout the relationship; even if the contributions made by each of the parties throughout the relationship are considered equal.
POST SEPARATION CONTRIBUTIONS
The contributions made by each party will be assessed at the date of trial (or at the time that a consent order or financial agreement is finalised), and not at the date of separation.
For that reason, as the title suggests, contributions made in the post-separation period (i.e. from the date of separation to the date of property settlement) will be relevant to negotiations or to the determination made at a final trial.
Post-separation contributions include the following:
- Financial contributions made directly or indirectly by you or a party on behalf of you (for example, a relative), to the acquisition, preservation and maintenance of property.
- Non-financial contributions made to the acquisition, preservation and maintenance of property other than by way of a financial contribution, for example by working unpaid in a family-owned business, or renovating the family home.
- Contributions made for the welfare of the family (including parenting and housekeeping).
These contributions will be considered, despite how they might differ from contributions made throughout the relationship.
Typically, the roles which each party played throughout the relationship will continue somewhat throughout the post-separation period. The main income earner will usually continue working and supporting the household and the primary carer for the children will typically continue to care for the children in the same way. In most instances, the court will find that homemaking and parenting contributions will offset financial contributions.
Difficulty arises where there are no children and one of the parties has simply grown accustomed to the lifestyle they once lead, expecting that it continues.
HOW WE CAN ASSIST YOU
Post-separation contributions to your former spouse’s property can include homemaking and care taking contributions which indirectly allow one of the parties to continue to work and accumulate assets or pay-down debts.
For more information about post-separation contributions, and how to protect yourself during the post-separation period, call our family law department on 1300 749 709 to set up a free initial consultation.
