What happens to property and income acquired after separation
Organising a property settlement after a relationship breakdown can be a complicated process. Many people are unsure about what happens to their income and assets acquired after they’ve split up from their partner.
Generally speaking, courts do not require people to go into a state of “suspended animation” once their marriage breaks down, pending the resolution of their financial arrangements.
In other words, you’re entitled to continue to provide for yourself and your family.
There are however a few categories of post-separation income or asset acquisition that are dealt with differently.
Property acquired after separation
There is no basis for excluding property acquired after separation from consideration in a property settlement.
In a recent case the court confirmed that the wife’s ongoing parenting contributions helped her former husband earn income to purchase a property after their separation. And that meant, that property was available for distribution between the two parties.
Post-separation windfalls
We all dream about winning lotto – but what happens if your ex hits the jackpot after you’ve split up?
In general, lottery wins post-separation will remain the property of the person who purchased the ticket. However, there have been some exceptions.
In one case the husband won $5 million after separation. There had been no property of value owned by the parties at the time of the split. The court heard that at the beginning of the relationship, the husband was dealing with a heroin addiction and the wife provided both financial and emotional support to him during that time. She supported him while he was studying and helped him with literacy skills, which meant he was able to gain employment.
At the time of the hearing, the husband arranged his finances to reduce his child support to practically nothing, and claimed that it was his mother who had won the lottery, not him.
The court awarded the wife 15 per cent of the prize pool, a sum of up to $750,000.
Inheritance
Inheritances received shortly before or following separation are often a considerable point of contention.
A recent case, focused on a couple who split up after a relationship of 21 years. The husband received two inheritances – the first one two and a half years before separation, and the second one a year before separation.
The court said “a property does not fall into a protected category merely because it is an inheritance” and decided that the inheritances were part of the property available for division between the two.
Post Separation income
Other types of income received post-separation can include redundancy payments, and in that case it’s likely the court will consider whether both parties made a contribution. For example, did the wife stay home and care for the children, while the husband worked. The court will also look at how much of the employment was undertaken while both parties were still living together.
It’s important to remember that income and expenditure continue to be scrutinised pending the resolution of property matters, particularly where spouse maintenance or child support could be an issue.
These complex matters require specialist family law advice. If you need to speak to a family law expert, get in touch with Michael Lynch Family Lawyers on: (07) 3221 4300 or email: [email protected]
