Dispute Resolution

In family law property matters in Australia, the treatment of assets and equity you held prior to a marriage or de facto relationship, as well as inheritances received during the relationship, is governed by the Family Law Act 1975 (Cth). Below is an explanation of how these are typically treated, supported by relevant legislation and case law examples.

 

  1. Assets and Equity Held Before the Relationship

General Principles:

  • Initial Contributions: Assets you brought into the relationship are considered part of your contributions to the property pool. These contributions are given weight when determining how property is divided.
  • The court assesses:
    • The value of the assets at the start of the relationship.
    • The duration of the relationship and how the assets were treated (e.g., whether they were pooled together or kept separate).
    • Contributions by both parties throughout the relationship, including financial, non-financial, and homemaker/parent roles.

Legislation:

  • Section 79(4) of the Family Law Act 1975 (Cth): This section outlines the factors the court considers when altering property interests, including financial and non-financial contributions.

Relevant Case Law:

  1. In the Marriage of Bremner (1994) FLC 92-498:
    • The court held that a party’s initial contribution of significant pre-marriage assets retained weight, but the overall division depended on the length of the relationship and subsequent contributions.
  2. Pierce v Pierce (1999) FLC 92-844:
    • A short relationship led to significant weight being given to pre-relationship assets. In this case, the Court found that the initial equity was substantially responsible for the equity in the relationship at the end of the relationship and that it was the overriding springboard for the equity of the relationship.
  3. Aleksovski v Aleksovski (1996) FLC 92-705:
    • Even if pre-relationship assets were significant, they may diminish in importance over a long relationship, particularly if both parties contributed to their maintenance or growth.

 

  1. Inheritance Received During the Relationship

General Principles:

  • Inheritances received during the relationship are treated as financial contributions by the party who received them.
  • The court considers:
    • Whether the inheritance was quarantined (e.g., kept in a separate account).
    • How it was used (e.g., to benefit the family or invested in joint property).
    • The timing of the inheritance (early in the relationship, mid-relationship, or after separation).
    • Any contributions made to it by the other party. For example, if a mother of one of the parties had a close relationship with their son or daughter in law who provided substantial care and support for that mother in law and/or the mother indicated in her will (or otherwise in evidence) that the reason she is leaving a gift or part of it is because of that relationship, care and support provided , then the Court may attribute the contribution to that inheritance wholly or in part to the son or daughter in law.

Legislation:

  • Section 79(4) of the Family Law Act 1975 (Cth): Includes contributions to property as a relevant factor.
  • Section 75(2): Factors related to future needs (e.g., disparity in earning capacity) may also influence how an inheritance is treated.

Relevant Case Law:

  1. Bishop v Bishop (2013) FamCAFC 138:
    • An inheritance received late in the relationship was excluded from the property pool but considered a financial resource of the party who received it.
  2. In the Marriage of Bonnici (1992) FLC 92-272:
    • The court considered an inheritance received during the relationship as a significant financial contribution by the recipient.
  3. Sinclair v Sinclair (2012) FamCA 388:
    • Inheritances were treated as part of the property pool, but the weight of the inheritance as a contribution was influenced by its use.

 

Key Considerations for the Court

  • The court adopts a four-step process in property settlements:
    1. Identify and value the property pool, including assets, liabilities, and financial resources.
    2. Assess contributions (financial, non-financial, homemaker/parenting).
    3. Consider future needs (Section 75(2) factors).
    4. Determine whether the proposed division is just and equitable.

 

Summary

  1. Pre-relationship assets: The court generally considers these contributions, but the weight depends on factors like relationship length and subsequent treatment.
  2. Inheritances: These are assessed based on how and when they were used during the relationship. They may either be included in the property pool or treated as a financial resource.

 

Michael Vassili has 36 years experience in Family Law matters and appears regularly as a trial advocate in hearings and on appeals. Our Family Law Team are in a great position to provide you guidance and advice on your matter in an initial no cost conference . Call us on 1300 557 819 at any time to organise a no cost conference either in person or by Teams or Zoom and we are more than happy to assist. Over 95% of our matters as we take a great deal of care and effort in navigating matters to resolution. Michael Vassili is an accredited specialist which is invaluable in reaching your best outcome and resolution.