How Spending Habits Affect the Division of Property and Assets After Separation

If you’re like me (a bit of a shop-a-holic) then keeping an eye on your finances may seem like a daunting task. If you’re like my partner (a great money saver) then you would be constantly frustrated when your significant other is bringing home a new pair of heels that they ‘saved’ 50% on in the sales! 

One of the questions that we often get asked as family lawyers is how each parties’ expenditure affects the overall division of property after separation. In most cases, there is usually one party who spends more money than the other. For the sake of this article, I’m going to refer to people like myself as ‘Spenders’ and people more like my partner as ‘Savers.’ 

We often find that post-separation, the Saver is frustrated by the lack of care taken by the Spender regarding money. Sometimes the Spender’s spending habits may have also reduced the overall property pool available for division to some extent or another. 

Below we have briefly detailed how a spending imbalance may affect the overall division of the property pool after separation. 

Spending for living expenses 

As much as the Saver may continue to insist that the Spender spends too much money at cafes, restaurants and doing grocery shopping, this is one of those times when the Court is unlikely to take this into account. This is generally also the case for funds spent on clothing or general required expenses. Spending for living expenses is considered necessary and normal. This is especially the case if the level of expenditure is similar or equal to what the parties spent during their relationship. 

Spending for big ticket items 

If the Spender has acquired assets with some value after separation, then these can be included in the property pool for division between the parties. For example, if they have purchased cars, jewellery or even a designer handbag, these can be valued and included within the property pool. This may operate in such a way to decrease the amount that the Spender will receive from the remainder of the property pool in the ultimate calculation and division. 

The concept of ‘waste’ when dividing property 

The Court may take into account the Spender’s spending habits if they are substantial enough to constitute ‘waste’. ‘Waste’ is considered as one party being at a financial loss resulting from the other party’s conduct. It’s designed to reduce or minimise the value of the property pool for a party’s reckless, negligent or wonton actions which have reduced the value of the property pool. 

One major example of when a Court may consider if one party has wasted assets is gambling. If the Spender has spent a large amount of money on gambling, especially if it was without the Saver’s knowledge or authorisation, then the Court may consider that the amount spent by Spender be ‘added back’ into the property pool as monies which the Spender has already had the benefit of. This will reduce the amount that the Spender receives from the remainder of the property pool by the amount they had already spent. 

Another example where the Court may consider to ‘add back’ funds into the property pool may be where substantial funds have been transferred out of a business or the joint bank account without any explanation. 

It’s important to note that ‘waste’ is an unusual concept and is assessed on a case-by-case basis by the Courts. The Courts do not regularly treat expenditure as ‘waste’. If you are concerned that your Ex has wasted assets, then you should contact an experienced lawyer to ascertain whether this may have any effect on the property pool and how you can best deal with this issue. 

Spenders vs. Savers 

For all of us Spenders out there, it may be beneficial to keep an eye on your spending after the separation and consider whether it falls into the ‘living expenses’ category or not. If not, and significant funds have been utilised, depending on the circumstances this could decrease the Spenders entitlement to the remainder of the property pool by way of inclusions of assets to the property pool or in more rare cases, by way of ‘add-backs’. 

For all of the Savers out there, keep in mind that funds spent on living expenses by your Ex, even if it is above what you would consider reasonable, are unlikely to affect the division of the property pool. 

Need guidance navigating the grey areas of property pool and the division of assets? Reach out to Bespoke Family Lawyers to book a free 30-minute CLARITY CALL. 

***Disclaimer***

This article is for general information purposes only and does not constitute legal advice or any other professional advice.