When parties to a relationship separate or divorce, they will at some stage need to divide their property through the process of a property settlement. Time limits apply to applications to the court for property settlement.[1]
Sometimes there can be a significant delay between the date of separation and date of a final property settlement. This may be because one party does not accept that the marriage is over or they do not want to meet with a divorce lawyer. It may also be because the parties just want to get on with their lives and avoid the perceived complexity relating to a property law settlement. This type of delay can have an impact on the final settlement, particularly if one of the parties receives an inheritance or other large lump sum payment after separation.
It is often thought that property acquired after separation will be excluded from the property pool to be divided between the parties. This was an issue that the Full Court of the Family Court of Western Australia considered in the recent case of Calvin v McTier [2017] Fam CAFC 125. In this case the husband acquired a significant inheritance from his father’s Estate four years after the parties separated. The Trial Judge found the net value of the matrimonial property to be $1,340,319.00. The inheritance remaining at the time of the trial was $430,686.00.
The Trial Judge in this case did not exclude this inheritance from the matrimonial pool. In considering the property globally the Trial Judge divided the property (including the husband’s inheritance) in the proportion of 65% to the husband 35% to the wife.
The husband appealed this decision to the Full Court of the Family Court of Western Australia, arguing that the inheritance should not have been included in the matrimonial pool. The Full Court found that the Trial Judge had discretion as to how to treat and divide the property that was acquired by the husband after separation (either considering the property globally or dealing with the property separately, and in doing so assessing the contributions to each asset as well as the s.75(2) factors). The appeal by the husband was dismissed.
The Full Court found the Trial Judge did not make a mistake in including the husband’s post separation inheritance in the pool of assets available for division. The Full Court determined that the inheritance did form part of the parties’ property interests at the time of the trial. The husband was ordered to pay the wife’s reasonable costs.
This case highlights the importance of seeking family law advice from a divorce lawyer at an early stage following separation. Property that is acquired by either party at the late part of any relationship or following separation may form part of the property pool. It is important to consider how such assets may be taken into account by a Court and what steps should be taken to formalise a property settlement and protect assets and entitlements that may already be in existence or that may be obtained in the future. This includes inheritances and other windfalls, such as lotto wins or redundancies.
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[1] If parties were married, applications for property settlement must be made within 12 months of a divorce becoming final. If parties were in a de facto relationship, applications for property settlement must be made within 2 years of the breakdown of the de facto relationship. The permission of the court is required if an application is made outside of these time limits, and this is not always granted.
Disclaimer
Family law situations can be complex and sometimes they can involve serious issues. Information outlined is proposed to provide general guidance only. Due to the seriousness of legal matters as well as the uniqueness of your individual situation, professional advice should be sought. For advice, please contact one of our Divorce Lawyers in Parramatta.
