Dividing assets – could your historical or current spend be added back?
When couples separate, dividing assets can be complex, especially when one party has used, disposed of, or hidden assets before a settlement being reached.
The legal concept of “add-backs” allows courts to account for those assets by “adding back” funds into the asset pool. The recent case of Boulton & Boulton and amendments to the Family Law Act, commencing June 2025, highlight the need to be aware of the changes for anyone currently involved in property settlements.
The current three main categories of add-backs
- Where there has been a premature distribution of assets, and property that has been disposed of or used for the benefit of one party.
- Property not disclosed or accounted for, including conduct designed to intentionally, recklessly, or negligently reduce the value of an asset; and
- Money spent on legal fees.
In the recent case of Boulton & Boulton, the complexities of add-backs were highlighted. It showed that the parties may need to present evidence of spend, including historical spend, when seeking to add money back into the asset pool, or when opposing an add-back. The judge in that case noted that extensive use of add-backs can significantly affect the distribution of property and that the Family Law Act allows the court to take into account any fact or circumstance to ensure justice prevails.
Boulton Case facts
Over $3 million of add-backs proposed by the wife were disputed by the husband. The court eventually added back $1,256,400 to the asset pool, which included the following transactions:
- $60,200 paid by the husband to his brother’s company for what the court deemed to be an illegitimate invoice;
- $596,000 from the sale of a property in 2017; and
- $600,000 withdrawn by the husband from a joint account.
The judge in Boulton accepted some of the wife’s proposed add-backs, including a significant add-back of $600,000, which the wife claimed the husband had withdrawn from a joint account in 2010, 11 years before they separated.
The husband claimed it was unfair and onerous for the Court to expect him to undertake a tracing exercise that far back. However, the Court held the husband did not provide a satisfactory explanation for the dissipation of $600,000, causing the judge to infer the husband had retained the benefit of the funds.
Legal Fee spend
We also note that in the case of Trevi & Trevi the court held that when legal fees are paid from property that would otherwise be included in the asset pool, those amounts are almost always added back.
June 2025 Amendments to the Family Law Act
The legislative amendments to the Family Law Act, coming into effect on 10 June 2025, may change the way the court addresses add-backs. Stay tuned and get advice on this more complex topic. Our panel of lawyers can assist you.
All information in this blog is of a general nature only and is not intended to be relied upon as, nor to be a substitute for, specific legal professional advice. No responsibility for the loss occasioned to any person acting on or refraining from action as a result of any material published can be accepted
