Impact of New Partner on Property Settlement
The Court undertakes a certain process when making a determination with respect to property settlement. Simplistically, 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 ‘future needs’. This is when the Court considers a number of factors, one of which is whether a party has re-partnered and is cohabitating with that new partner.
When considering whether there should be an adjustment on account of ‘future needs’ the Court assesses those needs taking into account the matters referred to in 75(2) of the Family Law Act 1975 and, specifically, subsection (m) which provides “if either party is cohabitating with another person – the financial circumstances relating to the cohabitation” (section 90SF(3)(m) for de facto couples).
The practical application of this section of the Act means that if a party to a separation commences living with another person, that other person’s financial circumstances may be taken into consideration when the Court considers the parties’ future needs. For example, by reason of cohabitation the other party’s costs of living are less given those costs are being shared between two people. Similarly, by virtue of the fact a party has re-partnered, their ability to borrow money may increase thus reducing their future needs for the purposes of property settlement.
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, do not hesitate to contact our Family Law team.
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