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Disposal of Assets Prior to Property Settlement

It is not uncommon for a party to property settlement proceedings to dispose of their interest in property without prior notice or in consultation with the other party.

Rule 13.01 of the Family Law Rules requires each party to give “full and frank disclosure of all information relevant to the case, in a timely manner”. Disclosure of information could be by way of producing documents, disclosure of financial circumstances or answering specific questions. In relation to disposal of property (whether it be by way of sale, transfer, assignment or gift), pursuant to Rule 13.04 of the Family Law Rules, the party disposing of their interest must provide disclosure to the other side if the transaction takes places in the 12 months immediately prior to separation or any time since separation.

It’s not the case that a party should not make any transactions post separation and prior to finalisation of their property settlement, but it is required for each party to keep the other up to date, by providing ongoing updating disclosure to the other party whilst proceedings continue.

What can be of issue though is if such transaction is made whereby the party to the proceedings does not receive a return for their interest, or transfers their interest for under market value, and as a consequence, the value of the matrimonial pool of assets is depleted. In these circumstances, the other party to the proceedings is likely to lead evidence in relation to the transaction. If it is proved that other party did receive less than market value for the asset, then potentially the court may take into account any shortfall amount by “adding back” the value to the other person, so that it can be taken into account when calculating the overall property division. Alternatively, the court could consider such transaction when applying its discretion. For instance the court may consider that the person disposing of the interest should be noted as having “wasted” the previously owned asset and taken into account generally when calculating a just split of the property.

It can be vitally important to take certain steps to ensure the asset is not sold or otherwise dealt with. Please contact our office to meet one of our family lawyers to discuss a transaction that your ex-spouse has undertaken, or if you consider the other party will likely take steps to deplete the value of the former matrimonial pool of assets.

Image Credit – Goodluz ©

Written by Kate Marr on August 16, 2017

She has a passion for helping people with their family law problems. She has special expertise in complex financial matters where her commerce background provides her with an an advantage in dealing with cases involving hidden assets, non-disclosure, overseas assets and family businesses. View Kate's profile

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