Add-backs in property settlements

Add-backs in property settlements

08 November 2021 Topics: Family law

In this video, CGW senior associate Craig Turvey talks about add-backs in property settlements.

VIDEO TRANSCRIPT

Hi, my name is Craig Turvey and I’m a senior associate in the family law workgroup at Cooper Grace Ward. Today I wanted to talk to you about add-backs in property settlements.

What are add-backs in property settlement?

An add-back is really where an asset or an item existed in the property pool. It’s now gone, whether that’s because it’s something’s that’s been sold or funds have been spent and one party seeks to have those funds basically notionally added back into the property pool. So, for example, if there was $100,000, in a bank account, I pulled that out, put it on red at the casino and lost the whole thing. My ex would probably try and argue that that should be $100,000 notionally added back, that the $100,000 just hasn’t disappeared, that it’s notionally added back to me because I’ve wasted it.

How are add-backs treated in court?

There’s a whole chain of cases that deal with add-back issues that really hinge down to whether it was reckless or negligent for the funds to have been wasted, or the asset to have been dissipated and so people like to ride on the back of those cases in family law world and try and add everything back that they think the other person has spent when they shouldn’t have. While there are a lot of cases where add-backs are appropriate, and where judges will make orders for add-backs, in my experience, that’s not what judges do in most cases. It’s the exception rather than the norm and that’s probably because they try to avoid people having these constant arguments about a wastage of funds, which could take you know, in a big matter, it could take forever to go through all the different allegations. What judges generally tend to prefer is that if there’s a suggestion, someone’s wasted funds, whether that’s recklessly or negligently, then they will in the existing property pool, give the other person basically a slightly higher percentage of the property pool to reflect the wastage if that’s what’s actually occurred. That seems to be what happens in most cases.

Should I request an add-back in my property settlement?

So, we often have clients who will come in and say, oh, he’s spent this much money, it’s a waste, I want that money notionally added back and you can of course, try and run those arguments, but we always advise our clients, well look, that’s probably not what’s going to happen if your matter is determined by a judge and so flowing from that, the important thing is probably to try and, keeping in mind that’s what a judge will do, is to try and preserve the assets that you do have and so if there is a lot of money in a bank account, or if there’s assets that you’re concerned about whether it’s a property that might be sold or shares or something like that, usually the safer option is putting in place steps to try and protect the assets that are there, rather than having them spent or dissipated and then trying to add them back at the back end of your matter.

Further information about add-backs in property settlement

So, if you need any assistance in terms of protecting the assets that you have, or if you have any questions about add-backs, please don’t hesitate to contact me or one of the other family lawyers at Cooper Grace Ward.

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