
Are New Partner's Assets and Income Included in Property Settlements?
When going through a property settlement with a previous partner, many people wonder how their new relationship might affect the process.
This is a common concern, especially when it comes to the assets and income of a new partner.
The Basics of Property Settlement
Before delving into how a new partner's finances might impact your property settlement, it's important to understand the general process. In Australia, property settlements following the breakdown of a marriage or de facto relationship are governed by the Family Law Act 1975. The Act provides a framework in the 4 step process for the division of assets, considering various factors to ensure a fair and equitable distribution
New Partners and Property Settlements
When it comes to the assets and income of a new partner, the general rule is that they are not directly included in the property pool to be divided between you and your ex-partner. The Family Law Act focuses primarily on the assets, liabilities, and financial resources of the parties involved in the relationship that has ended. However, while your new partner's assets and income may not be directly considered, they can indirectly influence the property settlement process in certain circumstances.
Indirect Impacts on Property Settlement
Cohabitation and Financial Circumstances
Section 75(2)(m) of the Family Law Act (for married couples) and Section 90SF(3)(m) (for de facto couples) state that if either party is cohabiting with another person, the financial circumstances relating to that cohabitation may be considered. This means that if you're living with your new partner, the court may take into account how this arrangement affects your financial situation. For example, if your new partner is contributing significantly to your living expenses, this could potentially reduce your perceived financial needs in the eyes of the court. Conversely, if you're supporting your new partner financially, this could be seen as an additional financial responsibility.
Future Needs Assessment
When determining a property settlement, the court considers the future needs of both parties. If your new relationship has significantly improved your financial position or reduced your living expenses, this could potentially influence the court's assessment of your future needs. For example, if your new partner contributes to your living costs by way of providing you with accommodation, or income from employment, a business, or investments, or if they have assets that could realistically be realised and proceeds applied to improving your financial situation, this might be considered as a future financial resource from which you would benefit, thereby reducing your perceived future financial needs.
Joint Assets with New Partner
If you've acquired new assets jointly with your new partner since separating from your ex, your share in these assets may be included in the property pool for settlement. For instance, if you've purchased a house with your new partner, your 50% share would typically be considered.
Disclosure and Evidence
While your new partner's finances aren't directly relevant to your property settlement, you may still need to provide some information about your current living arrangements and financial circumstances. However, this doesn't usually extend to full disclosure of your new partner's financial details.
Seeking Legal Advice
Every situation is unique, and the impact of a new relationship on property settlement can vary depending on individual circumstances. It's always advisable to seek legal advice tailored to your specific situation. A family law professional can provide guidance on how your new relationship might affect your property settlement and help you navigate the process effectively.
The Short Answer
While your new partner's assets and income are not directly considered in your property settlement with your previous partner, they may have indirect impacts depending on your living arrangements and overall financial situation. The key is to be transparent about your current circumstances while focusing on the assets and financial resources that are directly relevant to your previous relationship.
This article contains general information only. For advice regarding your specific circumstances, always seek individual advice from a qualified professional. Read the full Divorce Resource.com.au Disclaimer here
Published by, Christine Weston
Founding Director and Creator of Divorce Resource
Australian Nationally Accredited Mediator and Divorce Coach
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