My ex has a new de facto – how does this affect my property settlement?

My ex has a new de facto – how does this affect my property settlement?

One consequence of relationship breakdown is that one or both parties may start a new relationship.  This can be very difficult especially when an ex-partner sets up home with someone new before ‘the ink is dry’ on their financial affairs.

In advising our clients on how to reach a property settlement, we are guided by the provisions of the Family Law Act 1975 and case law which set out all the relevant factors that must be considered.  The threshold test is to decide whether a court should make any adjustment to property ownership i.e. whether it is ‘just and equitable’ to make orders at all?  This is usually answered in the affirmative on the basis that parties have separated and often have jointly own property and need to divide their assets so that they can move on with their lives.

We are then required to determine the net asset pool available for distribution by identifying all the assets, whether owned by one or both parties and similarly the liabilities whether incurred jointly or solely.  Our aim at this stage is to produce a balance sheet as a starting point for negotiation.

Next we identify what contributions the parties have made during the course of their relationship, in terms of direct and indirect contributions to the assets. The law makes it clear that welfare contributions as a homemaker and carer for children are equally important contributions and must also be considered. We aim at this stage, to advise our client as to a range of their entitlements in percentage terms based upon the relevant contribution factors.

Lastly we need to consider whether there should be any adjustment in the contribution percentages to take into account relevant future needs factors.  The Family Law Act provides a long list of factors which can be relevant to this determination, including health issues, care of children and disparity in earning potential.

The issues for consideration also includes, “if either party is cohabiting with another person–the financial circumstances relating to the cohabitation”: see Section 75(2)(m) Family Law Act 1975 for marital property settlement and Section 90SF (3)(m) for de facto property settlement.  In assisting our clients we can rely on this provision of the Act to request financial details of a new partner regarding their incomes, overheads and property ownership. We may be able to argue that there should be an adjustment in our client’s favour on the basis, for example, that our client is struggling to meet bills and pay a mortgage whereas their ex-spouse is able to share their costs with a new partner. The existence of a new de facto partner will possibly increase an ex-partner’s ability to borrow money and we could then perhaps argue, that there should therefore be an adjustment in our client’s favour.

Of course all families are unique and if you have any questions regarding your property matters you should seek independent legal advice regarding the facts that are relevant in your matter.