Key takeaways
The Court considers both financial and non-financial contributions when dividing property after a relationship breakdown.
If a party inherits property and the other makes no contribution to it, the Court may decide not to alter ownership.
The Court’s goal is to reach a just and equitable outcome based on each party’s overall contributions and circumstances.
When relationships come to an end, questions often arise about how assets should be divided, especially in situations where one party has made no financial contributions. This issue is frequently raised in family law proceedings and has a specific legal framework guiding its resolution. Whether the relationship involved marriage or a de-facto partnership, both the Family Law Act 1975 (Cth) and the Family Court Act 1997 (WA) allow the Court to consider a range of contributions (both financial and non-financial) when determining how property should be divided.
What happens if one party makes no financial contributions?
This is a common question asked during family law proceedings which has a specific legal answer to it.
When a relationship breaks down, the parties face the challenge of dividing their assets and, ideally, severing all financial ties on a full and final basis.
In Western Australia, the Family Law Act 1975 (Cth) regulates the separation of married parties, and the Family Court Act 1997 (WA) regulates the separation of de-facto parties. Section 79 of the Family Law Act and section 205ZG of the Family Court Act are the relevant sections that deal with the alteration of property interests.
Financial contributions can be made directly or indirectly throughout a relationship. Direct financial contributions include lump-sum payments towards an asset for example, and indirect contributions can consist of weekly contributions from your earnings towards expenses.
There are several factors that the Court will look at when resolving arguments between the parties about what each party is entitled to and what they will ultimately walk away with. They are outlined in section 79(4)(a) of the Family Law Act and section 205ZG(4)(a) the Family Court Act. The Court is required to assess the direct and indirect contributions to the acquisition, conservation or improvement of property.
Court decision: What about inherited property?
Marcin v Marcin [2020] FamCAFC 85 is an interesting example of this but dealing with property acquired by inheritance. Justices Strickland, Kent and Austin, on appeal, upheld the decision of a Judge in the Family Court of Western Australia when they found that neither party made any financial contribution, direct or indirect, to the acquisition of the property which the wife inherited. It was also found that the husband made no non-financial contributions, direct or indirect, to the acquisition of that property. It was found that any order altering the interest of the wife in her inherited assets would not be just and equitable, in all the circumstances.
Non-financial contributions
Contributions do not have to be financial to create an ‘entitlement’. The Court also takes into account non-financial contributions. Such contributions can encompass the improvement and conservation of the property through one’s labour. Non-financial contributions can include repainting the home, landscaping or renovations.
If you are going through a separation or have questions as to how property might be divided, especially in cases involving inherited assets or uneven contributions, it’s important to get clear and tailored legal advice.