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How are Significant Gifts Treated in a Property Settlement?

11 September 2018

Determining a percentage for property settlement requires a consideration of each spouse’s contributions. If one spouse receives a significant gift of money or property during the marriage which ultimately benefited the couple, either directly or indirectly it will be taken into account as a contribution by the spouse who received the gift, and that spouse, will usually receive an adjustment of the total property in their favour, however that contribution has to be assessed and weighed against all other contributions.

In a recent case before the Family Court, a married couple separated after 8 ½ years of marriage. The couple were both in their fifties, both employed and had no dependants. Shortly after marriage the wife’s parents gifted the parties their unencumbered home in which they were living, which at the time of the trial was valued at $1.8M. This gift made up almost 70% of the ‘non-superannuation’ property pool.  The trial Judge accepted that it was a significant ‘financial contribution’ on the wife’s behalf to the property of the marriage, however the judge had to weigh up all the other contributions, including those of the husband.

The Family Court is required to take a holistic approach to an assessment of contributions – it is not a straightforward mathematical or accounting exercise.  So whilst it is important to know the value of any assets and/or debts it is not as simple as an excel spreadsheet where you feed in information and it computes an amount to be received at the end.  The husband in the above case ended up receiving an entitlement of 30% of the ‘non-superannuation pool’ or ‘35% overall’, which may seem fairly generous after a relatively short marriage and a significant ‘financial contribution’ by the wife.  However, when weighing up all the other contributions it was within the range of the trial judges’ discretion.

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