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Protecting Your Assets After Separation

Protecting your assets immediately after separation is often overlooked by our clients, as this is the time when the parties are at their most vulnerable and are yet to obtain independent legal advice in relation to the division of their matrimonial pool. However, acting promptly to secure your assets post separation can often save you a significant share of the property pool.



Following separation, it is not uncommon for the party having control of most of the assets to increase their spending unnecessarily or to dispose of some assets. Unless this is characterized as wastage (i.e. gambling), spending on legal fees or a premature distribution of assets, any other type of spending would likely prejudice your rights in the property pool and you will end up receiving a worse outcome at the end of your matter.


Usually The Court will not pay too much attention to the conduct of the parties post separation and what they do with their assets. As noted by the Full Court in GVC v HPC (1998) FamCA 143 “The parties are entitled to reasonably conduct their affairs post separation in a manner that is consistent with properly getting on with their lives..” Notwithstanding this, the Court has the power in exceptional circumstances to notionally add back the assets into the property pool available for division.


Addbacks

A simple example of how addbacks work is as follows: consider a situation where the parties are separated and only have $100,000.00 in the Husband’s bank account and a car worth $50,000.00 in the Husband’s name. Following separation the Husband immediately transfers his car to a distant relative out of spite, who subsequently goes to live permanently overseas. In this case the Court is open to find that the car should be notionally added back to the parties’ assets, even though the husband does not have it in his possession or control. Accordingly, if the wife is entitled to 50% of the pool, she will then take $75,000.00 instead of $50,000.00, if the car was not notionally added back. This means that out of $100,000.00 in the bank account the Wife will take $75,000.00 and the Husband will only keep $25,000.00, and in the eyes of the Court this will translate to a 50/50 split, as the Husband is said to have received the car as the asset.


In Trevi & Trevi [2018] FamCAFC 173 the Full Court reiterated the fundamental precept that addbacks are exceptional. The Full Court noted that “First, “adding back” is a discretionary exercise. When the discretion is exercised in favour of adding back, it reflects a decision that, exceptionally, in the particular circumstances of a case, justice and equity requires it. The second premise is its corollary: in cases that are not “exceptional” justice and equity can be achieved, not by adding back, but by the exercise of a different discretion – usually by taking up the same as a relevant s 75(2) factor. Indeed, it has been said that the latter is “a course which is, perhaps, technically more correct” than adding back to the list of existing interests in property”


Simply put, you cannot rely on the Court to adequately protect your assets and interests in the property pool post separation by way of addbacks.


Options to Protect Assets After Separation


Essentially, there are two main ways to protect matrimonial assets after separation – a Caveat or an Injunction pursuant to Section 114 of the Family Law Act 1975.


Registering a Caveat over your former partner’s Real Property is often the quickest and most cost-effective option to protect your interests in Real Property, not legally owned by you. A Caveat means that there can be no further dealings with the property until the Caveat is removed. Accordingly, if the Caveat is registered, your former partner would not be able to sell or otherwise deal with the property, until there is an agreement reached with you regarding the division of parties’ property and the Caveat is removed.


It is important to understand that a Caveat can only be lodged pursuant to an equitable caveatable interest, which may arise due to the party’s financial or non-financial contribution towards the property in question. You are likely to have a caveatable interest if you have made payments towards the mortgage or liabilities of the property or if you made any improvements to the property, however, this needs to be carefully assessed prior to lodging a caveat, as there are serious cost ramifications for lodging a caveat without adequate grounds.


If the Caveat is not an option in your particular circumstances, the only other alternative is to make an urgent application to the Court for an injunction to restrain the other party from dealing with, using or disposing of a specific asset.


If you have recently separated you should not delay obtaining independent legal advice, as getting the right advice early on may make a huge difference on the outcome you will receive at the end of your matter. At Surge Legal we have a vast experience in complex Family Law matters and urgent applications to the Court for injunctive relief. Contact our office now for a free initial legal advice on 02 8722 5021 or make an online booking.

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