When Your Ex Starts Spending All the Money: Protecting Your Property Pool in Financial Settlement

Going through a breakup is tough, but it can become even more challenging when your ex starts splurging all the money, leaving you worried about the impact on your property pool during the financial settlement process. This scenario, unfortunately, seems all too familiar for many individuals, often falling into the pattern of wasteful spending outlined in the narcissist's playbook.

In this blog post, we will explore the implications of such behaviour, how to identify and prove wastage, and steps you can take to protect yourself in the court of law. The information provided here is for educational purposes only and should not be considered legal advice. 

Understanding the Situation:

Picture this: you and your ex-partner have separated, and now they're going through a midlife crisis. They want to impress their new friends, go on extravagant holidays, buy expensive clothes, and even acquire luxury vehicles. The catch is that they're spending joint funds, depleting the property pool that you both have a stake in. This situation is all too common, and many people are unsure about the rules and regulations surrounding wastage during family court proceedings.

Financial Responsibility:

As many listeners of our podcast have shared, they have been financially responsible throughout their relationship and even after separation. They have diligently followed budgeting practices, living within their means, and making extra contributions to their superannuation. Meanwhile, their ex-partner is living a lavish lifestyle, donning designer suits, playing golf in Dubai, and indulging in other extravagant activities. It's a frustrating scenario that raises concerns about how this behaviour will impact the financial settlement.

Defining Wastage and its Implications:

Wastage, in the context of family law, refers to any actions that reduce the overall property pool available for division. During the property settlement process, which involves assessing the value of assets such as houses, cars, superannuation, and even furniture, wastage can have significant consequences. For example, if your ex-spouse recklessly spends a substantial amount of money beyond normal living expenses, it diminishes the assets available for distribution. This can result in you receiving a smaller share of the property pool, even if it was meant to be divided equally or according to another agreed-upon ratio.

Legal Standpoint and Add-Backs:

Wastage is not a term derived from fancy Latin phrases but is rather a concept acknowledged in the Family Law Act. It falls under the category of contributions (Section 79(4) for married couples), and courts consider it a negative contribution to the asset pool. When wastage occurs, the court can "add back" the value of the wasted assets at the end of the proceedings. This means that the funds or assets recklessly spent by your ex-partner are not permanently lost to you, as they will be accounted for and deducted from their share of the property pool.

Proving Wastage and Protecting Yourself:

To establish wastage, you need to gather evidence. This can be achieved through disclosure, where your ex-partner's bank statements and financial records reveal excessive or unusual spending. If they attempt to hide this information, you may need to seek legal assistance to issue subpoenas for their financial documents. It's important to note that you don't need to prove exactly how the money was spent but rather demonstrate where it came from and how the property pool has been depleted. This can be done by comparing bank account balances before and after separation, tracking superannuation withdrawals, or identifying tax debts incurred post-separation.

When your ex starts spending money recklessly, it can create additional stress and uncertainty during the financial settlement process. However, if you understand the concept of wastage and its implications under family law you might be able to do something about it. Run don’t walk to your lawyer and let them know this is happening. It is better to be proactive or reactive to these situations. Our podcast talks about other actions you can take to prevent this from happening to you.

Want to learn more?

I encourage you to listen to our podcast “THE DIVORCE COURSE PODCAST” where we dive deeper into this topic and cover various other legal issues. Our podcast is a great resource for expanding your knowledge and staying informed about legal matters. However, it's important to remember that the information provided here is for educational purposes only and should not be considered legal advice. Every individual's situation is unique, and seeking personalised legal advice is crucial. So, while we strive to provide valuable insights, always consult with a qualified family lawyer to get tailored guidance based on your specific circumstances. Stay informed, protect your rights, and make well-informed decisions.

Click the link below to listen to the podcast episode now or find us on Apple or Spotify.