After separation, one of the first steps to undertake in a property settlement is to identify and value the parties' property available for division.
In some overseas jurisdictions, the manner in which property belonging to the parties is owned, registered or categorised in a relationship can determine whether it is included in the pool of assets available for division in the event of separation. Property categorised as being "separate", "personal" or "non-marital" may be excluded from the pool of assets, whereas "common", "marital" or "matrimonial" property may be included.
In Australia, however, the categorisation of property and how property is owned or registered is irrelevant for the purposes of identifying the pool of assets available for division. Rather, matrimonial property includes all assets, liabilities, superannuation and financial resources that the parties have an interest in under joint names, their respective sole names and, in certain cases, via corporate entities and trusts, whether those interests exist in Australia and/or overseas. Categories of assets can include:
- real estate
- savings, whether by way of cash or funds in bank accounts
- motor vehicles
- digital assets including cryptocurrency
- unlisted or listed investments
- personal property such as household contents, antiques, artwork, jewellery
- lottery winnings
- employee entitlements such as long service leave or redundancy payments
- assets or shares held by trusts
- business interests and business assets
- credit card debts, personal loans, loans owing to or by third parties and tax liabilities
Interests in assets or liabilities that are held together with third parties are also included in the pool of assets, although these may have a discount applied for lack of marketability or liquidity considerations.
Rather than focusing on how a property is registered, categorised or owned, the Australian courts will consider how and when property was acquired by one or both parties when they consider whether the property should be included in the pool of assets available for division.
Sometimes, property can be excluded from the assets available for division depending on how or when it was acquired (for example, an inheritance received post-separation), however, such circumstances are uncommon.
In most cases, Australian courts will consider the totality of the property available for division between the parties. How and when the property was acquired and each party's contributions to property may ultimately have a substantial impact on what each party keeps as their final property settlement outcome.
Can I protect particular assets from a property settlement claim in the event of a separation?
As demonstrated above, property is defined broadly for the purposes of Australian family law proceedings.
The only way parties can quarantine or protect particular assets or financial interests from a property settlement claim is to address the division of assets (and exclude the jurisdiction of court) by entering into a financial agreement at the commencement of, during or after a relationship/marriage, pursuant to the Family Law Act 1975 (Cth).
Ultimately, unless a financial agreement has been properly prepared and entered into, a former partner may be entitled to property that one party intended to quarantine from a property settlement upon separation – notwithstanding any private understandings or any other agreements that the parties may have had during their relationship.
If you have questions regarding asset protection before or during a relationship/marriage or in relation to financial disputes during a relationship/marriage breakdown, please contact a member of the Family & Relationship Law team for further information.
All information on this site is of a general nature only and is not intended to be relied upon as, nor to be a substitute for, specific legal professional advice. No responsibility for the loss occasioned to any person acting on or refraining from action as a result of any material published can be accepted.