What happens if your former partner has already spent the money before your family law property settlement is finalised?

It is one of the most common and emotionally charged concerns in family law matters. A party discovers unusual withdrawals, gambling losses, excessive spending, hidden accounts or money that simply appears to have “disappeared” before separation or before court proceedings.

For many years, the Family Court often dealt with these situations using what lawyers called “add backs”. In simple terms, the Court could treat money that had already been spent or disposed of as though it still existed when dividing the property pool.

A major Full Court decision, however, significantly changed that approach, ruling that property which no longer exists generally cannot simply be “added back” into the asset pool.

That does not mean the Court ignores hidden, wasted or spent money, however, the way the Court now deals with those issues has changed in an important way.

What Were “Add Backs” in Family Law?

For decades, Australian family law courts commonly used “add backs” in property settlement cases.

This usually occurred where one party had:

• spent large amounts of money,
• gambled assets away,
• used funds on a new relationship,
• paid excessive legal fees,
• hidden money,
• or otherwise reduced the property pool before trial.

In many cases, the Court would notionally “add back” that money into the balance sheet when calculating the division of assets between the parties.

The idea behind the approach was fairness.

If one party had improperly reduced the available assets, the Court could effectively treat the money as though it still existed when assessing the overall property settlement, and that the party concerned had already ‘received’ that money.

What Did the Court Decide?

The case involved a dispute about property settlement following the breakdown of a relatively short marriage.

By the time the matter reached trial, substantial amounts of money received from property sales had already been spent by both parties on legal fees and living expenses.

Both parties asked the Court to include those spent funds as “add backs” in the property pool.

The Full Court ultimately confirmed that, following recent amendments to the Family Law Act, courts must identify the property that actually exists at the time of the hearing.

In other words, if the asset no longer exists, it generally cannot simply be inserted back into the balance sheet as though it still exists.

The Court said:

“Only the existing property of the parties is to be identified and only that existing property is to be divided or adjusted.”

That represented a significant shift in the way family law property settlements were to be approached.

Does This Mean Hidden or Wasted Money No Longer Matters?

No.

This is probably the most important point arising from the decision.

The Full Court made it clear that the Court can still take into account:

• wasted money,
• hidden assets,
• gambling losses,
• excessive spending,
• premature distributions,
• and other suspicious financial conduct.

What has changed is the mechanism used to deal with it.

Rather than artificially increasing the property pool by notionally “adding back” money that no longer exists, the Court will now generally consider that conduct as part of its broader assessment of contributions, fairness and the parties’ current and future circumstances.

The Full Court described this as a more “holistic” assessment.

Can the Family Court Still Take Gambling or Excessive Spending Into Account?

Yes.

If one party has recklessly wasted assets, hidden money or significantly depleted the asset pool, the Court may still take that conduct into account when determining what overall percentage division is fair.

The difference is that courts are now less likely to treat the missing money as though it physically still exists in the property pool.

Instead, the conduct itself may influence the percentage outcome.

For example, if one party has:

• dissipated assets,
• concealed funds,
• or used large amounts of money irresponsibly,

the Court may still ultimately award the other party a larger share of the remaining assets.

Why Does This Matter for Family Law Clients?

The decision is important because it changes the way many family law property settlements will now be argued and prepared.

Lawyers and clients can no longer simply assume that spent or missing money will automatically be “added back” into the asset pool.

Instead, much greater emphasis is now likely to be placed on:

• explaining how money was spent,
• proving whether assets were wasted or hidden,
• analysing the financial impact of that conduct,
• and demonstrating why the overall percentage division should be adjusted to achieve fairness.

Importantly, this also means financial disclosure remains critically important.

Bank statements, business records, transaction histories and forensic accounting evidence may still play a major role in identifying suspicious transactions and understanding what happened to assets during the relationship and after separation.

What If You Think Your Ex Has Hidden or Wasted Money?

If you believe your former partner has:

• hidden assets,
• withdrawn unusual amounts of money,
• gambled away assets,
• transferred funds,
• or significantly reduced the property pool,

it is important to obtain legal advice as early as possible.

Even despite this change in how the court will deal with wasted or hidden assets, these issues remain highly relevant in family law property settlements.

At Websters Lawyers, we regularly advise clients in complex family law property disputes involving:

• hidden assets,
• financial disclosure,
• suspicious transactions,
• businesses and trusts,
• forensic accounting,
• and disputes about wasted or dissipated assets.

We can assist in obtaining and reviewing financial disclosure, analysing financial records and advising you about how the Court may now approach these issues.

We offer a free initial telephone consultation to discuss your situation and provide practical advice about your options.

Call 8231 1363 to speak with one of our family law lawyers.

Shinohara & Shinohara [2025] FedCFamC1A 126