But it’s MY asset - Common Misconceptions Part 3
Often one party to a marriage or de facto relationship had property or cash before entering into the relationship. In other cases, one partner may have purchased a property or acquired an asset, which they consider to be their own and which they have devoted themselves to maintaining. One common misconception is that an asset that is solely owned by one party does not get taken into account in a property settlement, upon separation. This can also become an issue where one party purchases an asset, such as a property, after separation but before a property settlement has been finalised.
The first step in property settlement proceedings is to determine the parties’ net asset pool. This includes all assets and liabilities in the parties’ names, whether jointly, individually, or with another person or any other asset in which either party has an interest. This includes any interest in a company or Trust where one party has a controlling interest, any property that was owned prior to before the relationship, in joint names with another person and any assets or liabilities that the other party may not even know about. It also includes any property acquired after separation.
One question we often get asked is “but I made all the mortgage repayments, and his/her name isn’t even on the title – surely he/she can’t make a claim against the property?” The answer to this is that the asset will generally be included in the net property pool for division between the parties. So, if you came into the relationship with substantial assets, perhaps a home and a couple of investment properties – those will be taken into account if you retain them and later separate from your partner. How those assets are treated in the property settlement will be determined by looking at a number of factors, such as each parties’ contributions to the acquisition, maintenance and value of the asset prior to, during and after separation. In some cases, certain assets may be treated separately to the rest of the asset pool, or can even be quarantined from the asset pool available for division. However, this will always depend upon the individual circumstances of the case.
If you need advice on protecting your hard-earned assets from a potential property settlement, or you want to know where you stand, contact Butlers for further information.