Separating parties often take lengthy periods to attempt to resolve property settlement disputes. Significant problems can arise when people fail to formalise arrangements for property settlement which may place new wealth you acquire after you’ve separated at risk of being divided partly to your spouse by a Court. Whilst there have been cases where individual assets are excluded following separation, such as inheritances and the like, more recent decisions by Courts in Family Law have stipulated that:
“there is no basis for excluding from consideration any property in which the parties have an existing legal or equitable interest."
The case of Holland v Holland
“the categorisation of property as “an inheritance” or as “after-acquired” property often leads to an erroneous argument that unless contributions to that property can be established, the property should be “excluded from consideration”. As we have said, that argument is erroneous by reason of ignoring the fundamental premise that s 79 is directed to all of the existing legal and equitable interests in property of the parties or either of them without exclusion of any of those interests.”
Ultimately the Court in Holland allowed the appeal on the basis the Trial Judge had failed to correctly approach the relevant principles in the assessments of contributions and had made an erroneous finding that the inheritance of the husband was a ‘financial resource’ and not property.
The take home message from Holland is that parties should not presume assets are to be ‘excluded’ from the pool of assets for division, rather a proper assessment of those assets as contributions should be had and applied to the individual circumstances of that case. Parties should always get advice as early as possible following separation from their spouse.