The End of ‘Add-Backs’ in Family Law Property Settlements

Warning:   The Court has now formally excluded ‘add-backs’ from family law property settlements. What does that mean for me and my property settlement?

On 23 July 2025, the Full Court of the Federal Circuit and Family Court of Australia* handed down a decision of Shinohara (2025)**  that has caused quite a stir in the Family Law field.   This case has significantly changed the traditional approach to the treatment of ‘addbacks’ in family law property disputes.

In family law, an “add-back” refers to the process of notionally adding the value of an asset back into the property pool for the purpose of division, where that asset has been spent, transferred, or otherwise dissipated by one party during the relationship or after separation. 

Before the Family Law Amendment Act 2024 (which came into effect on 10 June 2025), if one partner used up part of the parties’ joint assets under certain circumstances, the court could “add back” that money into the property pool—even though the funds no longer existed.

Some examples of what previously could be “added back” would be if one party spent joint savings on their own legal fees, or wasted joint savings on gambling, or sold an asset and spent the proceeds. The court could, before the changes, treat that money as if it still existed and include it in the asset pool, for division between the parties.

The Full Court in Shinohara confirmed that the only property the court can now divide is what is physically or legally in existence at the time of the trial.  If the asset or money is gone, it is no longer part of the divisible pool of assets and is not included in the matrimonial balance sheet.  However, the Full Court found that the lost funds can still be taken into account, by way of assessment of overall contributions of the parties or in assessing the parties future needs, and the Court can then adjust the amount a party is to receive. 

What are the consequences for clients?

1. There will be a greater need for clients to look more closely at and be able to control, early on, how the other party spends their money between the separation and the final hearing of the matter.  If for example, one person is the spender and the other is the saver – the effect of the exclusion of add-backs is more likely to favour the spender. Therefore, parties need to be more cautious with protecting funds or in some instances it might warrant seeking interim orders from the Court.

2. It will be relevant, when one party paid all of their legal fees from the joint assets and the other party borrowed monies to pay for legal fees.  In this instance, traditionally, if one party had spent say $100,000 in legal fees from the joint assets, the Court would add-back the $100,000 on the Balance Sheet as if the monies were still available. It is not entirely clear as to how the Court in the future will treat legal fees. It is likely that the Court will consider the monies spent on legal fees as part of the overall assessment of contributions and needs, when they are taking into consideration the parties’ respective entitlements.

The new case is likely to significantly affect the future landscape of family law matters. It is my view that clients will need to be more vigilant in ensuring that the assets they have at separation are protected and that there is some mechanism in place for people to be able to control spending.

If nothing is in place, there is potentially a risk that the person who is the good saver is more likely to be disadvantaged than the spender, particularly, if one party has the greater wealth and greater control and access to assets.

If you have questions about your family law property settlement, or would like to speak with one of our experienced Family Law Solicitors about your matter, contact our Sutherland Shire Team on 8525 2700, click here to request an appointment, or click on the Book Now button below. Our experienced team of Family Law Solicitors include Riccarda Stock, Nicole Quirk, Shweta Kumar, and Nikita Ward.

Article by Nicole Quirk
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*“The Full Court of the Federal Circuit and Family Court of Australia – Division 1 – Appellate Division.”
**“Shinohara & Shinohara [2025] FedCFamC1A 126”