A question we sometimes hear from clients going through a separation and property settlement is, “can I keep my pre-marital assets?” After all, if you already owned an asset before embarking on the relationship, shouldn’t that asset rightfully belong to you if the relationship ends? Unfortunately, it’s just not as simple as that. There are a number of factors the courts consider holistically when determining what is a fair property settlement between parties. Let’s take a look at the subject of “initial contributions”, or what each party brought into the relationship at its start (including land or real property, cash and other assets).
Can I keep my pre-marital assets?
First, what are the principles underlying how courts divide property?
The courts look at a whole range of factors, assessing the assets and liabilities of the relationship (the property pool), each party’s contributions to the relationship, and each party’s future needs. The courts will also consider whether the proposed property settlement is just and equitable. Each factor is then given a weight, with this weight up to the judge’s discretion after assessing the particular facts and merits of a matter. There is no “formula” applicable to all cases that the courts can apply to assess contributions, because each case is so different.
So what exactly are “contributions”?
In terms of contributions, the courts will look at:
- Financial contributions
This refers to any direct financial contributions by parties, for example: who purchased a property, who contributed to a mortgage, who paid for property maintenance, rates and taxes, who received an inheritance or gifts from family and any other indirect financial contributions to property during the marriage.
- Non-financial contributions
These relate to contributions of time and effort that parties may undertake in maintaining a property. So, who carried out upkeep of property (mowing, maintenance etc), who managed the property, if a party spent time to maintain the property, unpaid personal labour for renovations etc.
- Homemaker contributions
This area relates to the role of a homemaker spouse who handles cooking, cleaning, washing, ironing, childcaring duties, etc. It has long been the case that when it comes to property settlements, courts will treat financial contributions made by a “breadwinner” just as important as the non-financial contributions of a homemaker/parent in a marriage.
- Other considerations
The courts will also look at how any property settlement may impact on the future earning capacity of the parties. It will also consider any issues under section 75(2) in relation to spousal maintenance.
What about initial contributions?
Initial contributions fall into the category of financial contributions and refer to the assets each party brought with them at the start of their relationship.
In terms of how the courts weigh initial contributions, the family courts have well established that the weight to be attached to an initial contribution should ordinarily to be assessed together with all the contributions, rather than being quarantined (kept separate) in any way.
Does the length of the relationship matter?
Yes. It’s important to note that the length of your relationship will impact on how the courts assess initial contributions and the answer to the question “can I keep my pre-marital assets?”.
With shorter relationships and marriages, the courts may be more open to taking an asset-by-asset approach to assessing initial contributions. The initial financial contributions made by a party to a short relationship will typically have an influence the final property settlement outcome. This is because the initial contributions are likely to represent a larger proportion of a property pool, and there are likely to be less assets acquired jointly over the shorter period of time.
For relationships considered longer, courts will tend to take the view that over time, the way that assets were first acquired becomes less important. With the passage of time, the ‘ownership’ becomes more blended and the weight of an initial contribution is usually lessened. Over the course of a long relationship, it’s more likely that other contributions were made, and these may well outweigh the initial contribution.
Can I keep my pre-marital assets?
The upshot is, even if you did bring an asset into a relationship at the start of a marriage, this initial contribution will be relevant and ought to be considered together with all other contributions during the marriage. It all depends on the property settlement as a whole, and whether the court finds the split just and equitable.
As there is such a broad range of factors the courts must take into account when working out a property settlement, it’s a good idea to seek legal advice on your entitlements. For help, please contact Canberra family lawyer Cristina Huesch or one of our other experienced solicitors here at Alliance Family Law on (02) 6223 2400.
Please note our blogs are not legal advice. For information on how to obtain the correct legal advice, please contact Alliance Family Law.