A major change is underway in family law property settlements following a recent decision by the Full Court of the Federal Circuit and Family Court of Australia (Shinohara, July 2025). This ruling has fundamentally altered how courts handle the concept of ‘add-backs’, a practice that has long influenced the division of assets after separation or divorce.
If you’re navigating a property settlement, understanding this change is crucial. Here’s what you need to know.
What Are ‘Add-Backs’ in Family Law?
Traditionally, an add-back allowed the court to treat assets or money that one party had already spent as if they were still available when calculating the total pool of property to divide.
This could include funds spent on:
- Legal fees
- Gambling or other discretionary expenses
- Assets sold with the proceeds already used
Essentially, the court treated these spent funds as if they still existed, so a party couldn’t reduce the asset pool by spending money before a hearing.
What Has Changed?
Under the Shinohara decision, only assets that still exist at the time of the hearing, either physically or legally, can be divided.
This means that:
- Money or assets that have been spent or dissipated will no longer be ‘added back’ to the pool.
- Judges can still consider how funds were spent when assessing relative contributions or future needs, which may influence each party’s share.
In short, once money is spent, the court won’t include it in the property pool; however, spending habits may still affect how property is divided.
Key Consequences of the Change
- Tracking Spending After Separation is Critical
With add-backs no longer available, it is now more important than ever for separating partners to monitor and control spending after separation. Failing to do so could inadvertently disadvantage the person who preserves their assets while the other party spends shared funds.
- Legal Fees Paid from Joint Assets
Previously, legal fees paid from joint assets could be added back. Under the new approach, these expenses are likely to be considered as part of the overall contributions and needs analysis, rather than automatically restored to the asset pool.
- Protecting the Asset Pool
The ruling changes the strategy for family law settlements. If one partner has access to more funds or tends to spend them, the other may need to take proactive steps, such as applying for interim court orders, to safeguard shared assets from dissipation.
How to Protect Your Entitlements
The best way to navigate these changes is to seek legal advice as early as possible. Southern Waters Legal’s team of experienced family law solicitors can help you:
- Understand how the new rules affect your situation
- Take steps to protect assets
- Navigate property division law with clarity and care
Family law settlements are complex, and recent changes make timely, informed action more important than ever. If you are separating or considering a property settlement, expert advice can make all the difference.
Family law matters can be stressful, but you don’t have to face them alone. Reach out to our compassionate team of family law solicitors to discuss your situation and explore the best path forward. Call us on (02) 9523 5535 or email clientservices@southernwaters.com.au.
