Are Pre-Marital Assets Treated Differently in Australia?

If you and your partner are considering divorce or are in the process of divorce, one concern you might have is how your pre-marital assets in Australia will be treated when dividing property.

Many spouses ask us the question: “If I bought this property before we were married, will I be able to keep it after we have separated?”

To unpack this, it is important to understand how property is divided during a separation, as well as whether pre-marital assets in Australia are treated differently than assets acquired during the course of the marriage.


How is Property Divided After a Divorce or Separation?

After a separation or divorce, the parties involved in the relationship are entitled to seek a division of certain assets.

The pool of assets to be divided can include things such as:

  • Property (whether owned independently or jointly);
  • Cars or boats;
  • Business interests or shares;
  • Household items;
  • Jewellery;
  • Superannuation; and
  • Inherited assets.

The most straightforward approach to this situation is for both former spouses to negotiate how the property should be divided. If an agreement is reached, this can be formalised in the form of a consent order: a legally binding court order which, if violated, can result in penalisation by a Family Court.

If a separating couple is unable to reach an agreement about the division of property, dispute resolution and mediation is usually the next step. If this mediation still fails to result in an agreement, the parties may apply to the Court, which has the power to make financial orders in relation to marriages under Part VIII of the Family Law Act 1975.

When deciding property settlement cases, the court will consider factors such as:

  • The assets and liabilities of you and the other party individually and jointly, and what they are worth;
  • Direct financial contributions by each party, such as property you each had when you began to live together, and your wage and salary earnings while you lived together;
  • Contributions to the welfare of the family, such as caring for children; and
  • Each party’s future needs, taking into account things like age, health, financial resources, care of children and ability to earn.

With these considerations in mind, the court will make a decision regarding the division of property moving forward. Despite the common misconception that assets will automatically be split 50/50, the division of property is handled on a case-by-case basis, with a wide variety of potential outcomes.

One common question received by our family lawyers regarding property division is: “If I owned an asset before getting married, is that asset claimable by my partner now that we’re divorced?” Answering this question requires an understanding of how pre-marital assets in Australia are assessed during a property settlement.


How are Pre-marital Assets in Australia Treated During a Separation or Divorce?

A premarital asset in Australia is an asset that is acquired before the commencement of the marriage.

While people often assume that these assets will be off-limits during the division of property, this is not necessarily the case. Even though an asset purchased before a marriage is considered separate property as opposed to marital property, it will still be factored into the asset pool and considered a contribution of the person who brought the asset into the marriage.

The erosion principle, which is applicable in Australian family law, provides that over time, the value of a pre-marital asset decreases. For instance, in a longer relationship, the value of your pre-marital asset is offset by the contributions of your spouse throughout the course of the marriage.

This is particularly relevant in longer marriages (typically 5+ years), as the Court may find that the value of the asset has decreased significantly from its original value and therefore will result in a smaller contribution to the asset pool. This is even more pertinent if a spouse has directly contributed to the value of the asset itself, for example, if the pre-marital asset was a house and the spouse contributed to it with maintenance, landscaping or renovation work.


Need Help With Property Settlements or Pre-marital Assets in Australia?

Property settlements can quickly become complicated and stressful, so if you are in the process of a divorce or considering divorce, it is important that you seek appropriate legal counsel.

At Pullos Lawyers, our experienced team can help guide you through the legal considerations that accompany separation, and ensure that you are making sensible and informed decisions concerning division of property and pre-marital assets in Australia.

We can also assist with a range of matters including De Facto & LGTBQ+ Law, Spousal Maintenance, and property settlement. If you would like to discuss your legal options, please get in touch via email, or call us in our Gold Coast office on (07) 5526 3646, or our Brisbane office on (07) 3144 1641.