Tuesday, July 3, 2018

How are Windfalls after the Date of Separation Treated in Property Settlements?

View blog How are Windfalls after the Date of Separation Treated in Property Settlements?  by Matthew Burgess
One issue that arises relatively regularly in relation to personal relationship breakdowns is the way in which assets acquired by one spouse following the date of separation, but before the property settlement, are treated under the property settlement.

The issues in this regard can be particularly sensitive where the financial windfall is as a result of, for example, the death of a parent of one of the spouses or a windfall gain such as a lottery win.

Unfortunately, as is often the case in relation to family law matters, the one consistent theme is inconsistency.

In other words, the family court has stated strongly on a number of occasions that how financial windfalls received after the date of separation will be allocated under the property settlement will depend almost entirely on the particular factual circumstances.

For example, the family courts have adopted the following approaches:

1) completely segregating all of the financial windfall so that it is only accessible by the spouse who received it, while also not penalising the spouse in terms of what they are otherwise entitled to receive from the joint matrimonial property;

2) segregating the financial windfall to the benefit of the spouse who received it, however reducing that spouse’s entitlement to the joint matrimonial property;

3) including the financial windfall in the pool of assets to be distributed between the spouses, but adjusting the pool to provide a greater weighting to the spouse that received the financial windfall;

4) including the financial windfall in the matrimonial pool and essentially ignoring the source of the funds.

Broadly speaking, where a financial windfall or a significant financial contribution, has been made by a spouse prior to a property settlement, then the longer the time period between the windfall or contribution and the separation, the more likely it is that the family court will ignore the source.

Again however, this conclusion is subject to the overriding theme that the court will ultimately assess each situation on a case by case basis.