Assessing your contributions to a relationship

When determining how assets and liabilities should be divided upon separation, one of the steps the Family Court will take is to assess the contributions each party has made throughout the relationship.

This assessment may be only one piece of the puzzle but it is crucial in the Court’s determination of the entitlements of the parties.

The exercise is a retrospective one. It involves looking into the past and determining what each party brought into the relationship, the various contributions made by each party during the relationship and the various contributions made since separation (if any).

There are three broad types of contributions:

• Financial contributions;
• Non-financial contributions; and
• Contributions are homemaker and parent.

Financial contributions

These contributions are generally straightforward. They involve a financial input made by one party towards the “acquisition, conservation or improvement” of the parties’ property.[1]

Examples of financial contributions include:

• Initial contributions by way of ownership of real estate, motor vehicles or other assets
• Income from employment or by other sources
• Accumulation of savings or superannuation
• Payouts received (i.e. redundancy or insurance payouts)
• Inheritance, windfalls or gifts received

Non-financial contributions

These contributions are also made towards the “acquisition, conservation or improvement” of property of the parties, but are not financial in nature.[2]

Typically, non-financial contributions involve unpaid labour by a party which increases the value of an asset. Examples include:

• Physical labour which increases the value of a property (i.e. renovations)
• Managing investment properties
• Contributing to the growth of a business

Contributions as homemaker and parent

These contributions are made towards the welfare of the family,[3] and may include things such as:

• Raising children;
• Cooking, cleaning or other domestic duties;
• Maintaining a property.

Assessment of weight

After identifying the types of contributions made by each party, the Court will then assess how much weight will be given to them.

This can be a complex exercise, however, over time, some principles have been developed which can help guide us. For example, we can consider:

Contributions as homemaker or parent are given equal weight to financial contributions.

By way of example, if one party worked full time during the relationship and the other stayed at home and cared for children, those respective contributions will be treated equally.[4] This is increasingly so where the contributions were made over the course of a lengthy relationship.[5]

The length of the relationship

In a shorter relationship, initial contributions will be given more weight. Conversely, the longer the relationship, the more likely contributions will be considered close to, if not, equal unless there were significant contributions made by one party outside the ordinary roles adopted by the parties which warrant a departure, such as a significant inheritance or gift.

The timing of contributions

The weight attributed to initial contributions will generally decrease as the relationship progresses. Very rarely will someone receive their entire initial contribution back in the assessment of their contribution-based entitlements.

For example, a person who had $500,000 equity in a property at the start of the relationship will not automatically receive a $500,000 credit for that equity upon separation.

In a similar vein, large injections of cash from external sources (e.g. from an inheritance or gift) received towards the end of a relationship will be given greater weight than if they were received at the start of the relationship.

Take aways

Parties make a range of contributions throughout the course of their relationship.

In determining how property interests will be altered a court will assess the weight to be attributed to the various contributions made by the parties. This exercise is often complex and involves not only determining what type of contributions were made, but how much weight to place on those contributions.

If you would like some clarity about how your contributions might be assessed, the team at O’Sullivan Davies can assist.

Contact us today to arrange an initial consultation.

[1] Family Law Act 1975 (Cth), s79(4)(a); Family Court Act 1997 (WA), s205ZG(4)(a)

[2] Family Law Act 1975 (Cth), s79(4)(b); Family Court Act 1997 (WA), s205ZG(4)(b)

[3] Family Law Act 1975 (Cth), s79(4)(c); Family Court Act 1997 (WA), s205ZG(4)(c)

[4] Hoffman & Hoffman [2014] FamCAFC 92.

[5] Fields & Smith [2015] FamCAFC 57.