Impact of New Partner on Property Settlement

When determining a property settlement, the court must first ascertain the pool of assets to be divided. The parties’ respective contributions (financial and non-financial) to that pool are then assessed. The next step in this process is for the court to assess the parties’ respective current and future circumstances. This is when the Court considers a number of factors, including such as whether a party has re-partnered and is cohabitating with that new partner.

When considering whether there should be an adjustment for future needs, the court looks at matters referred to in 79(5) of the Family Law Act 1975 and, specifically, subsection (q) which provides “if either party is cohabitating with another person – the financial circumstances relating to the cohabitation” (section 90SM(5)(q) for de facto couples).

The practical application of this section means that the Court is to consider whether each party has re-partnered and whether as a direct result of this that party’s financial circumstances are impacted. For example, by reason of cohabitation the party’s costs of living are less given those costs are being shared between two people.

It is important to understand that just because one party has re-partnered, it does not automatically warrant an adjustment to the property settlement. However, the purpose of this legislation is to enable to Court to take consideration of the new relationship and determine whether given the facts available and the parties’ current and future circumstances whether it would be just and equitable to provide an adjustment of the available property pool.

Ultimately, the court employs a high degree of discretion when considering what effect one party cohabitating with a new partner has on the property settlement. It all depends on the circumstances of the particular case. If you would like to discuss the impact of a new partner on your financial settlement, please contact Armstrong Legal.