Post-separation contributions are a monetary contribution type included in the pool of assets to be assessed in a family law property settlement. The Full Court of the Family Court has commented that post-separation contributions are an ‘extremely relevant consideration’ (Maine and Maine [2016] FamCAFC 270 at [38])
If one party in a separation substantially adds to their assets after separation, but before settling their property settlement, they may have to share their post-separation wealth with their former partner.
Post-separation contributions in a case include financial contributions (e.g. employment bonuses or redundancy payments) and non-financial contributions (e.g. an improvement on the value of an asset), and parenting and homemaker contributions. Post-separation contributions may be made from the date of separation until either the date of settlement or the date of trial if agreement is not reached. The period between the date of separation and trial should be as short as possible.
Contributions pursuant to section 79(4) of the Family Law Act 1975 (the Act) form step 2 in the four step approach by the Federal Circuit and Family Court of Australia (FCFCOA) of dividing the asset pool between parties. The four step approach is:
- work out the legal and equitable interests of the parties in the existing property.
- what did each party contribute to the relationship pursuant to section 79(4) of the Act;
- what are the parties’ future needs (if any) pursuant to section 75(2) of the Act; and
- is the outcome just and equitable pursuant to section 79(2) of the Act.
It is a common misconception that to determine what each party contributed to the relationship, the FCCOA need only determine:
- what assets and liabilities each came into the relationship with; and
- what money or homemaker duties each party provided during the relationship.
The FCFCOA also needs to know what contributions parties have made after they separated. The Court stated in a 2005 case that ‘it would generally be necessary for the Court to acquaint itself with changes in the composition and value of the property pool, so that post-separation contributions can be assessed’. (Woodland and Todd (2005) FLC 93-217 at [18])
In a recent Full Court decision, the Court found that in assessing contributions it is obliged to consider parties’ contributions over ‘the entire relationship between the parties arising out of contributions before, during and after the formal tie of marriage’ (Maine and Maine [2016] FamCAFC 270 at [21], quoting Kowalski v Kowalski (1993) FLC 92-342) In that case the post separation period was 11 years, nearly third of the term of the entire marriage of 34 years. The court commented that ‘the parties’ respective contributions during the 11 year period between separation and trial were an extremely relevant consideration’(Maine and Maine [2016] FamCAFC 270 at [38]).
A party must produce evidence on the composition of the asset pool at the time of separation and at the time of trial (e.g. equity in the matrimonial home at separation and at trial) to allow the FCFCOA to assess post-separation contributions. Where a party’s post-separation financial contributions are in dispute, copies of bank statements will be required. Testimony evidence by affidavit of the post-separation role, responsibilities and obligations of a party will be sufficient for parenting and homemaker contributions.
For expert initial advice about your post separation contributions, contact us for a free telephone consultation.
