What happens to the property I owned before we married if we separate?

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Following separation after a marriage or a de facto relationship, both parties to the relationship are entitled to divide the assets of the relationship. This is done by way of a Family Law Property Settlement.
In a property settlement all assets owned by both parties are pooled together. The contributions each party has made to these assets must then be assessed, calculated and expressed as a percentage. The next step is to see if there needs to be an adjustment to account for the differing future needs of the parties. Finally we need to consider whether the settlement appears just and equitable in light of al of the circumstances.

One question that clients commonly ask is;

“What will happen to the assets I brought into the relationship?”

Contributions that are made at the beginning of the relationship are considered separately from contributions made during the relationship.
Contributions made during the relationship are divided into two main categories being financial contributions and non-financial contributions.

It is a common arrangement that one party to a relationship takes the role of the primary breadwinner and thus may contribute more financially towards the asset pool. The other party may have higher non-financial contributions and could be classed as the primary care giver of the children or the homemaker. There can of course be many variations of this arrangement.

Both financial and non-financial contributions are considered to be of equal importance. However assets that are brought into the relationship at the beginning of the relationship differ from contributions made during the relationship.

These assets might be:

  • Cash/investments
  • Real estate a party owns
  • Superannuation
  • A business or company a party owns or has an interest in

An adjustment in a property settlement will be made in light of one parties’ greater financial contributions at the beginning of the relationship. For example if one party enters the relationship with significantly higher assets than the other then that party would expect to receive an increased percentage in the property settlement to account for this initial contribution.

The percentage that will be allowed to account for this initial contribution will be affected by the following factor.

1. The value of the initial contribution in relation to the size of the final asset pool.

  • The less significant the contribution, the smaller the percentage allowance that will made to account for it.

2. The length of the relationship.

  • The longer the duration of the relationship the less significance that will be placed on the additional initial contributions of a party.

3. The weighting up of the initial contributions as against all the other contributions made by the parties throughout the relationship.

4. How the specific initial contribution was dealt with by the parties during the relationship.

  • The percentage allowance for the initial contribution may be decreased if joint funds were used to maintain the asset during the relationship.
  • The typical example is an investment property where joint funds are used to service the mortgage.

Family Law Property Settlements are always determined according to the specific facts of each matter. There is no rule of thumb or exact formula that can be applied to determine how your assets would be divided in a property settlement.

If you are separating from your partner, it is important to get advice from a qualified Family Law Specialist early on in the process to advise you as to how your matter would be dealt with if it were to proceed to court.

Once you have received the right advice you will be in a good position to settle the matter and avoid the lengthy and costly process of court litigation.

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