What happens when money is spent after separation?

An issue that often arises in family law property settlement cases is whether property that has been sold or money spent after separation should be notionally added back to the property pool.

The answer is – it depends on why and how the money was spent.

This issue was recently considered by the court where a property was sold just before separation, and the husband received approximately $250,000. In the three years after separation he spent most of it. The wife argued that it should be “added back” and debited to the husband as partial property settlement already received by him.

In the Property Settlement decision the Full Court said “…. parties are entitled to reasonably conduct their affairs post-separation in a manner that is consistent with properly getting on with their lives and if money is to be ‘added back’ some three years after it was spent, account must be taken of what the evidence reveals about what was spent on ‘ordinary living expenses’ and of the financial circumstances of the parties more generally.

In this case the Court looked at what the husband had spent the money on and found that a considerable portion of the money had been spent on ordinary living expenses, including food.

In those circumstances, the money spent was not added back.

On the other hand, we have been involved in property settlement cases where money has been gambled, or wasted, or spent inappropriately or extravagantly, where the court has added back the lost monies, or adjusted the settlement in other ways to recognise the wasteful or inappropriate spending by one party.

For detailed information about Family Law Property Settlement click here.

If you need to know more about your situation, contact us.