As the 2025 changes to the Family Law Act (Cth) 1975 are examined and litigated, the Family Law Courts in Australia and practitioners are discovering just where some intended and unintended consequences may lie.
The June 2025 changes include a requirement that the Court when asked to divide property can only divide existing property. This has now been confirmed by the Court in the recent decision of Shinohara. Specifically, the Court can only include property for division that exists in the hands of either party – arguably, this means that the following items may no longer appear in the ‘asset pool’ of the parties:
- Funds spent without the knowledge of the other party during the relationship
- Funds sent overseas and dissipated, and unable to be traced due to being overseas
- Funds spent on lawyers – if the money is no longer in the hands of a party, then it is not included
- Partial property division – if funds are released, but expended on fees, on living costs, or even on more frivolous ventures, they are not part of the pool
The Court has made clear however that this does mean that these issues are forgotten, but rather that these items would then be considered as part of the ‘holistic’ approach in assessing and determining contributions – for example, the expenditure of $100,000 on legal fees may be seen as a negative contribution that results in a higher percentage of the remaining asset being provided to the other party. However, a holistic approach, particularly in longer relationships, is not going to be a dollar and cents accounting, and frequently the ins and outs of who spent what in the above scenarios gets lost in the wash.
The intended effect of this change would be it appears to make assessment and determination of assets easier and less controversial. The consequences may range away from this, and asset dissipation strategies may well be encountered and need to be headed off at the pass significantly more in this brave new world.
