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In other articles on the Watson & Watson website, we discuss how the Family Courts decide how to divide property between separated or divorced people. One of the major components of that decision making process is the requirement that the Federal Circuit and Family Court of Australia (which now replaces the Family Court of Australia and the Federal Circuit Court) consider the contributions made by each party to the marriage or relationship to the acquisition, maintenance and improvement of the matrimonial property.
The Court also considers whether or not there should be an adjustment in favour of one party or both parties in relation to the factors set out in Section 75(2) of the Act.
The Federal Circuit and Family Court of Australia will attempt to reach an outcome that is fair and equitable. The same principles apply to married people, people in de facto relationships and same sex marriages and relationships.
What are Contributions?
Section 79 of the Family Law Act (Cth) contains the definition of what constitutes a contribution. There can be more than one kind of contribution and contributions do not necessarily have to be made at the same time. One critical kind of contribution will be the direct financial contribution of money or assets acquired or brought in at the beginning of or during the relationship or marriage.
Contributions can be direct financial contributions, indirect financial contributions or contributions to the care and welfare of the family constituted by the husband or wife, mother or father and children. The various types of contributions that can be made are discussed in other articles on the Watson & Watson website.
In this article, we discuss how the initial contributions of one or both of the parties to a marriage or relationship will be treated by the Federal Circuit and Family Court of Australia at the time of final property division.
When can contributions be made?
What is an initial contribution?
In many cases that come before the Courts, the parties to a relationship or marriage will not have significant assets at the commencement of the relationship and will acquire assets over time. Often each party will contribute to the growth of assets and their contribution may be different but will be taken into account.
In some cases, one party or both parties to a relationship or marriage may have assets and bring these into the relationship or marriage. These are known as initial contributions and depending upon the contributions and the extent of those by each party, they can be significant and have an effect on the outcome of a property division that may take place many years later.
The party who made the greater initial contribution will want to receive the benefit of that greater contribution. The Courts always recognise the contribution and give appropriate “weight” to such contributions however when they have been made years before, the Judge will give less weight in deciding the case. Each case will be determined on its own facts.
Watson & Watson provide advice to husband who had made significant financial contributions - One recent case
Watson & Watson were recently consulted by the husband following his separation from his wife after a long marriage. He and his wife had divorced and needed to divide their property.
Prior to meeting his wife (and prior to marriage), the husband had acquired significant valuable assets and had brought those assets into the marriage. The assets included more than one piece of real estate and a large share portfolio. Prior to meeting his wife, the husband had also received two substantial inheritances. Some of the real estate received by way of inheritance was retained by the husband and also brought into the marriage. During the marriage the real estate was sold and the sale proceeds were used to purchase land and to build the matrimonial home on the land.
During the marriage the husband received another substantial inheritance and retained the property that had been inherited. All these properties were in the husband’s sole name.
The husband’s question to Watson & Watson was “will I get credit for what I had and brought into the marriage and for the money and property that I inherited during the marriage?”
Watson & Watson’s Advice
Watson & Watson have acted in many cases involving unequal initial contributions through either inheritance or personal effort.
The many cases decided on the issue of the value to be attributed to initial contributions are varied. We can extract some conclusions:
In the above case
Watson & Watson advised the husband that in all the circumstances, his initial contributions were very significant and would be likely to result in the Court considering him to have made the superior contributions and accordingly, that the division of property would not be equal and that the husband would receive a larger share of the existing property. The erosion of the contributions over time would result in a situation where the husband may have his share of the division of property reduced by reason of the contributions that the wife did make during the marriage.
The matter was resolved on favourable terms to the husband.
If you have separated or propose to separate and are proposing to enter into financial/property discussions with your estranged spouse or de facto partner, our experienced Senior Family Law Solicitors can assess your circumstances and advise and assist you in achieving a fair and equitable financial settlement. Please contact Richard Watson Senior Family Law Solicitor or his Personal Assistant Shereen Da Gloria to discuss your matter and seek appropriate advice.
This is only a preliminary view and is not to be taken as legal advice without first contacting Watson & Watson Solicitors on 9221 6011.
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