NSW Couples Spending Habits - Considered under Family Law?

[Dave Pearsen]

If one spouse spends all of their earnings, whilst the other saves all of theirs, what tends to happen upon divorce?

Does the spouse who spent all of their money on themselves still get half of their partners savings?

Obviously it would seem perverse to punish the spouse who made personal sacrifices in order to save their income, but how does it usually play out in real life divorces?

The way I understand it, family law in Australia is effectively saying that a spouse should somehow have control over their partner's spending habits? And that they are, in effect, spending half of their partner's money... when they spend their own income? Is this correct?

 

[AllForHer]

In property settlements following divorce, all assets and liabilities are considered entirely joint. The court assumes that when the parties entered into marriage, their intention was to share all finances equally to support the joint family lifestyle, and settlements are decided according to that basic covenant. The process is as follows:

1. What is the total joint asset pool of the parties?
2. What is the financial and non-financial contribution of each party?
3. What are the future needs of each party?
4. Is the settlement just and equitable?

As you can see in Step One, there is no distinction of his and hers asset pool.

 

[Dave Pearsen]

So, are you saying that a court would not take into consideration if one partner spent all of the money that they earned on themselves, whilst the other partner saved all of their money for their future?

They would just immediately assume that the saving spouse's savings was a "joint asset pool" - regardless of their wishes?

Is the court literally suggesting that partners should have control over each others spending habits?

I'm sorry, but this sounds perverse and a degradation of the sanctity of marriage. I hope I am misunderstanding it.

 

[AllForHer]

It's correct that the court considers spendings and savings to be an equal component of the joint asset pool, but I think you may be misinterpreting why it is this way.

How couples organise their finances is variant across the board, but in the circumstances you've described, one partner's salary is dedicated to their collective savings, while the other partner's salary is dedicated to expenditures.

If the saving partner didn't have the benefit of the spending partner, their savings balance would be significantly smaller because they'd be funding their own day-to-day spending requirements, so those savings and the spendings are mutually beneficial for both parties. Basically, one party wouldn't be able to save as much if the other party wasn't covering expenditures, and the other party would be able to save more if they weren't covering as much of the expenditures.

On the notion of controlling each other's finances, I think this is an inaccurate way to consider the thing. The court doesn't intend to tell couples how they should organise their finances. In fact, the court commits itself to minimising its involvement all together in domestic affairs, but the Marriage Act 1961 (Cth) defines marriage as the union of a man and a woman to the exclusion of all others, voluntarily entered into for life, and that means the union of their assets, as well.

Thus, it's not about controlling each other's finances, it's about working together toward joint goals as part of the union you both entered into when you got married, and I think that is more reflective of the sanctity of marriage than the suggestion that each party's finances should be considered separate to each other when they go through the unfortunate motions of divorce.

 

[Dave Pearsen]

Thank you for your response, but you have misread my question.

I wrote "Does the spouse who spent all of their money on themselves still get half of their partners savings?"

In your answer you have described a couple where one partner spends all of their money on joint expenses. This is not what I am describing.

Again, my question was: "are you saying that a court would not take into consideration if one partner spent all of the money that they earned on themselves, whilst the other partner saved all of their money?"

Of course, by "take into consideration" I mean "not assume that the saving partner's savings was half the property of the other partner".

Also, you say "the court doesn't intend to tell partners how to control their finances". It doesn't matter what the court claims it does or doesn't intend to do. If someone holds a gun to my head and says "Look, I'm not intending to tell both of you how to control your finances, but after X number of years, if you both ever part ways, I'm going to steal whatever your partner has left in their bank account and give half to you and do the same for your bank account" you had better believe that I would suddenly become very interested in what my partner spent their money on - and go to any effort to convince them to stop spending their money on things that I wouldn't spend my money on. And this would, of course, degrade our relationship to the point where we no longer felt that we had personal autonomy and the freedom to live our lives the way we choose. It would be the end of our trust and put our loving relationship in serious jeopardy. It is a disgusting concept that I reject wholeheartedly.

(Furthermore, I am in a defacto relationship and let me tell you that at no point did I agree to this perverse set of rules.)

 

[AllForHer]

All right, let me answer your questions as you've posed them above.

Your question was: Does the spouse who spent all of their money on themselves still get half of their partners savings? The answer is unknown because there is no formula for how a property settlement is decided in terms of percentages.

However, had you asked: Does the spouse who spent all of their money on themselves still get a percentage of their partners savings? The answer is yes, they would, because a court would never rule it just and equitable (Step Four) to award a property settlement that argues one party has made no financial or non-financial contribution (Step Two) to the marriage, simply because they allegedly 'spent everything they earned on themselves'.

This is where the union element of marriage comes in. It's a legal definition, not a moral one, that the parties enter into the union of marriage on their wedding day, and they agree that's what they're voluntarily doing when they wed. While ever they don't need the court to arbitrate, they can conduct their marriage and finances however they so choose, but the legal definition of marraige that they agree to on their wedding day means that if they do need the court to arbitrate, they acknowledge that it will do assuming that everything about their lives is now united.

In regards the court's intention, the preferred method of property settlement is to reach an agreement amicably, without even needing the court to decide the matter for you, and it has a pathway of alternative dispute resolution options that parting couples must take before the court will agree to arbitrate a property settlement. That's what I mean by 'the court's intention'. The court intends to minimise its involvement in such affairs by excluding itself entirely unless the couple calls upon it to help them settle their dispute. The Family Law Act 1975 is entirely null and void for every Australian couple until they are unable to reach agreement. Summarily, the court doesn't hold a gun to anyone's head, but if they can't reach an agreement by their own rules and ask the court to do it for them, then unfortunately they have to follow the court's rules. If it seems perverse, then perhaps it is best to reach agreement without the court's involvement, isn't it?

If you're in a de facto relationship, it may interest you to know that the court orders property settlements for de facto relationships in nearly the exact same fashion as it does married relationships.

 

[Dave Pearsen]

Thank you.

You write that "the parties enter into the union of marriage on their wedding day, and they agree that's what they're voluntarily doing when they wed."

Ultimately, even though I disagree with the concept that marriage should necessarily default to combining a couples finances, if couples were made aware that they were entering into this agreement (they are not) at the then I can see no issue with it.

What I have a massive issue with is this agreement being forced onto defacto couples. They have not signed anything and at no point have agreed to be subject to these perverse standards.

It is absurd to say "If it seems perverse, then perhaps it is best to reach agreement without the court's involvement, isn't it?" as one party is able to have all the bargaining chips since they can simply refuse to reach an agreement and then legally steal half of the other's wealth against their will. When one party has an entire government and justice system in their corner then the negotiation cannot be fair or equitable. In this area of family law the justice system is not on the side of fairness and equality, it is on the side of wealth redistribution.

Finally, even though I understand that the remedy to this madness is a BFA - these usually start at around $3000 and can cost much more. Furthermore, many lawyers flat out refuse to be involved with them because of how readily the courts discard them and can then leave the lawyer liable for repercussions from the client.

The entire issue seems to me to be a blatant attempt to redistribute wealth among the population in order to reduce the welfare burden upon the state.

Simply saying that a marriage is "assumed" to and "automatically" involves the combining of finances is an arbitrary assertion - based on nothing but "tradition" and ulterior motives by the government. It is nonsense - and I have still not heard a single valid objective justification for it.

Each person and couple is different. We all come in to relationships with our financial autonomy intact, so why is it destroyed by the courts upon divorce (where no agreement is made)?

According to this article, 65% of Australian couples now keep separate bank accounts - and the numbers are much higher for the younger couples: Should you and your partner keep separate accounts? | The New Daily

So if the majority of Australian couples no longer live by this "assumed standard", then why is it still being enforced?

The current "standard" is outdated, perverse and inappropriate for modern marriages. Couples should have the right to make up their own mind about how much of their finances they want to share with their partner, or anyone else - not have 50s era values thrust upon them by the courts - and no party should have that bargaining chip in their corner.

 

[Dave Pearsen]

I would like to reiterate my question, as it has not been answered yet in this thread:

If one spouse spends the majority of their earnings on themselves, whilst the other saves all of theirs, what tends to happen upon divorce?

Does the spouse who spent the majority of their earnings on themselves still tend to get half of their partners savings?

Or does the judge tend to take into account that one partner spent the majority of their earnings on themselves and so therefore heavily reduce the amount of their partners savings which they are awarded by the court?

 

[AllForHer]

I feel I have answered your question, but perhaps I wasn't clear enough. To reiterate, no, they don't tend to get half of their partner's savings. If the court is asked to arbitrate, they definitely get a percentage of their partner's savings, decided by the circumstances of the case.