Property Settlement Add-Backs Explained

In family law, property settlement add-backs are situations where money or assets that were spent, given away, or used up by one partner may still be “added back” into the property pool for division. This used to apply when a person spent joint funds on things like legal fees, gambling, gifts, or large personal expenses before the property settlement was finalised. The goal was to make sure one partner didn’t unfairly reduce the assets available for both parties.

Recent changes to the Family Law Act mean courts now rarely “add back” assets that no longer exist. Instead, judges look at the spending and may adjust the final property split by considering factors like contributions and future needs. In other words, add-backs are less about putting the money back into the pool and more about ensuring the final outcome is fair.

The Shinohara Decision

The recent landmark case of Shinohara & Shinohara (No 2) [2025] FedCFamC1F has redefined how a property pool is calculated in family law property settlements.

It is a long-established practice in family law financial cases, where assets that have been sold or funds spent during a separation, they are “added back” into the property pool. Amendments to Section 79 of the Family Law Act 1975, that came into effect on 10 June 2025, determine that a Court can now only consider, “existing legal and equitable rights and interests” in property as at the time of trial.

This is significant as it means that the asset pool is limited to assets that exist at the time of the trial and property that no longer exists can no longer be “added back” to the property pool.

There are 3 main categories of addbacks:

• Wastage: If during a separation one party has spent money on non-essential items such as gambling or holidays or incurred debt for non-essential purposes.
• Disposing of Assets: When one party to a separation sells an asset that existed at the time of separation, such as selling the family home or vehicles, particularly if it is below market value.
• Legal fees: If one party uses joint funds to pay their legal fees.

Contributions and Future Needs Factors

The Shinohara decision has restructured how ‘addbacks’ are considered by the court. Rather than being considered as a part of the property pool, the Court applies the following sections:

• Section 79(4): Considerations relating to contributions
  If assets have been sold or funds spent, the Court can consider this as part of the parties’ contribution history and can consider the circumstances as to how the funds or assets were dissipated. The court can consider this holistically and award a higher percentage of the property pool to the other party.
• Section 79(5): Considerations relating to current and future circumstances
  The court can consider the current and future needs of the parties and how the dissipation of assets has affected or could affect the individual circumstances and make adjustments in the property division on these factors.

Practical Implications for Separating Couples

For couples navigating a property settlement there are following key considerations:

• Value of the Property Pool: If assets have been dissipated before the trial they will not be added back to the pool. This means the size of the pool could be much smaller. It also means there is a realistic value on the pool as it is not comprised of assets that no longer exist.
• Legal Tactics: Lawyers need to reframe their legal arguments to consider dissipated assets through sections 79(4) and 79(5) of the Family Law Act which concern the contributions and future needs of the parties.
• Evidence: Separating couples should keep a detailed account of all assets, sales and expenditure. Following these legislative changes and the Shinohara decision, there is more onus on the parties to show how assets were distributed or funds spent and why this should be considered by the court when considering the division of property and property adjustments.

Practical Examples of Addbacks:

• You and your ex sell the matrimonial home and make a profit of $200,000 that you divide equally. Your share of the profit goes into a savings account and still exists. Their share is gambled and no longer exists. You cannot add their share back to the asset pool. You can argue that your financial contribution to the property pool outweighs theirs by $100k and an adjustment should be made in your favour.
• You and your ex hold funds in a joint bank account. Your ex withdraws funds to pay for a holiday. The result of this is you are left with limited financial resources and have a limited ability to financially pay for your housing needs for yourself or your children. The actions taken by your ex have directly impacted your future needs. The funds spent on the holiday can no longer be added back into the property pool however, you can argue that those funds should be taken into consideration when looking at your future needs and that an adjustment be made in your favour.

This Shinohara case is significant in that it supports the amendments to the Family Law Act and the methods by which property settlements are considered and structured. The court is now constrained to considering property that exists and considers wastage and the dissipation of assets under contributions and needs factors.

If you are going through a separation, Bell Legal Group can help you protect your shared assets and funds and help guide you through the settlement process.

If you need legal advice on how these legal changes could affect your case, contact our family law team at Bell Legal Group.

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