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  • Gabriella Ferraro

Untangling the Knot: The Intricate Role of Initial Contributions in Family Law Disputes

Written by Nanki Kiegaldie

When a married or de facto couple separates, one important step is the division of their shared assets and liabilities. This is done through a formal property settlement, which is a legal contract between the spouses that outlines their agreement on how to divide their assets and liabilities. One crucial factor in determining the property settlement is the initial contribution made by each spouse to the relationship. This initial contribution refers to the assets that each party brought to the relationship at the beginning, whether it is in the form of cash, property, or other valuable items.

There is no fixed formula used by the court in determining initial contributions. Instead, the court considers various factors such as the monetary value of the contribution, the percentage it represents of the total property pool, the length of the relationship, and the significance of other contributions made by the other spouse.

In assessing initial contributions, it is also essential to determine the nature of the asset and its effect on further contributions during the relationship. For instance, a spouse may have contributed a home at the start of a long-term relationship, and the value of the house may have significantly increased by the end of the relationship. In such cases, more significant weight is given to the initial contribution because it provided substantial benefits throughout the relationship.

Apart from financial contributions, non-financial contributions such as child-care and household management are also considered initial contributions.

The length of the relationship is another critical factor in assessing initial contributions. In shorter relationships, the initial contributions of each spouse are more important in determining the division of property since there are typically fewer jointly acquired assets, and it is easier to identify the original owner of an asset. However, in longer relationships, the court assumes that the couple's assets have merged over time, and initial contributions are assessed against the totality of contributions made throughout the relationship, including unpaid child-care and household duties.

For instance, in a recent decision of the Family Court[1], the parties had been married for 20 years, and the husband had an initial contribution of part shares in three parcels of land. The trial judge found that the husband's contribution was 66%, and the wife's contribution was 34% of the whole property pool. However, this decision was reversed by the Full Court, which found that the husband's contribution was 53%, and the wife's contribution was 47%. The Full Court emphasized several principles relating to the assessment of initial contributions in relationships of longer duration, such as the need to assess each party's contribution to the acquisition, maintenance, and preservation of the property pool.

In conclusion, initial contributions play a crucial role in property settlements in Australia, and it is important to understand how they are assessed in determining the division of property.

If you have any questions or require help negotiating a property settlement after the dissolution of a relationship, it is advisable to seek the assistance of our family law expert.

[1] Jabour & Jabour [2019] FamCAFC 78

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