We’ve all heard the stories. A couple separates and then commences the long process of a financial property settlement. However, before any agreements can be made, one of the ex-partners decides to withdraw a large sum of money from a shared bank account and spend it lavishly or recklessly. Or they decide to take a shared asset and sell it. In both cases, without their ex-partner’s agreement.
If you’ve found yourself in this situation, where does that leave you? After all, the money is already spent. The asset is already gone. Isn’t it? Can you get some of that money back, or is it gone for good?
‘Addbacks’ is what we call it when assets from the shared property pool are spent or sold and one party seeks to have those ‘added back’ into the property pool. It’s a pretty simple name for what is actually quite a complicated matter.
Why is it complicated? Well, the Court obviously can’t give more than what exists now. They can’t simply require that money – that is no longer in the shared account – or an asset – that is no longer owned by either party – be simply dropped back into the pool.
Of course the Court has some methods for achieving fairness up their sleeves. Often this depends on the type of addback that is being requested.
There are three main categories or types of addbacks.
While the Court can and may decide to add back all or part of the funds to the shared pool on a notional basis (which means adjusting the ‘value’ of the asset based on current market value and other factors). Addbacks are the exception rather than the rule. In fact, it simply doesn’t happen very often anymore.
Instead, it’s far more likely that if one party has acted recklessly or negligently in terms of the property pool, then the other party will receive a higher percentage when the pool is divided.
This is representative of the Court’s changing viewpoint over time, particularly because today our assets and cash are moved more freely and easily, often with just a few clicks of the keyboard. Decisions and updates in recent years have leaned into an adjustment of the property pool in favour of the other party, rather than a straight addback of funds.
When considering whether or not to request an addback, it pays to remember that in reality, addbacks are the exception rather than the rule. The Court will rarely accept submissions surrounding addbacks, as too many would slow down the system, making it more difficult for families overall.
The most efficient option is usually to try to stop this situation from happening in the first place. You can do this through:
It’s an important lesson for couples to be very careful about how they spend money post-separation and pre-settlement.
Of course, if you can’t stop the wastage or reckless spending of an ex-partner, then seeking an addback might be an option. Our team can certainly advise you on whether or not that’s the right option for you.
It’s important to remember that you can still spend your money to meet your reasonable expenses, even if it’s in a joint account or is part of your shared funds. You don’t have to stop living just because you separate. And you shouldn’t! You just need to be cautious that you aren't wasting or recklessly spending your money prior to a settlement.
At Patrick Dawson Law we want to help you protect your shared assets and monies while going through the settlement process. And of course, if you want to request an addback, we can help you to do that.
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