Article written by Nardine Collier
Family Lawyer Cairns & Alice Springs

I recently read an Interesting article on news.com.au entitled;

“My partner’s ex-wife ‘stole’ my inheritance

A WOMAN has been forced to pay more than half a million dollars to her partner’s ex-wife after being trapped by a bizarre law.”

The lady in question (“Deb”) had met the love of her life (“Jim”). Jim had been previously married but believed his property matters had been sorted out with his former wife. (You can see what is coming, can’t you?) Deb got an inheritance and they bought a house. Jim then received a claim from his former wife seeking a property settlement, because it turned out that their property had actually never been formally resolved. The article says that “Deb” ended up losing half a million dollars including her inheritance as this had to be paid to Jim’s ex-wife.

This is a pretty extreme scenario, but what you do need to know is:

  • The only way to formally settle property between couples after separation, so that it is legally binding, is by way of court orders (be that consent orders or by order of the court following a contested hearing) OR a financial agreement.
  • Letters between you, or even a typed-up agreement, is NOT a binding agreement and is only evidence of what was intended. The court is able to make orders that are not what was agreed if the agreement reached was not “just and equitable” (these are the words in the Family Law Act).
  • So – when you settle property matters, go the extra step and make sure you formalise the agreement.

The second problem poor old Deb faced was that by the time the property was divided as between Jim and his former wife, Jim now owned property with Deb, that was included in the property pool to be divided between him and his ex-wife. How can this happen?

This is because when the court comes to look at a property case, it looks at CURRENT assets and liabilities. Not what you had at separation (although that is important) but what you currently have. If there is a sufficient connection between the property you currently have, and the relationship, the court might include the current property, in the property pool of assets to be divided – even if you acquired the property after separation and own it with someone else.

Of course, there are many factors involved, but you cannot assume that the property you have with your current partner is ‘safe’ from a claim by your ex-partner. If this scenario bothers you, the best thing you can do is seek some legal advice as to how you might be able to protect your current assets – particularly if you are the “Deb” in your situation.

Nardine Collier is a Nationally Accredited mediator and has been mediating family law disputes for 20 years. She is a Family Dispute Resolution Practitioner, a Family Law Arbitrator, a panel mediator for various Australia wide organisations and for courts and tribunals, and regularly mediates at legal aid conferences in family law, in Cairns and the Northern Territory. She is also the Cairns representative of the Queensland Chapter of the Resolution Institute of Australia.