What Financial Contributions Affect a Property Settlement?

Earnings, gifts, and other monetary contributions to marital property are considered when dividing the property pool after a divorce When a Family Law Court makes a property settlement after a divorce, it is required to consider both the financial and the non-financial contributions that each spouse made to the property pool.

As a general rule, a party who made more significant contributions will receive a greater share of the property pool.

Non-financial contributions are those that do not involve a contribution of money or property. Examples include providing homemaker or childcare contributions that make it possible for the other spouse to earn money. This article examines financial contributions in more detail.

Direct Financial Contributions

Direct financial contributions toward the property pool include money or property that a spouse brings into the marriage or that a spouse acquires during the marriage. Examples of direct financial contributions include:

• Earnings, such as salaries and bonuses
• Other compensation, such as profit distributions or increased stock ownership
• Interest and dividends received from investments
• Superannuation interests
• Gambling proceeds

The court considers contributions that added property to the property pool (for example, additions to a savings account or asset purchases) as well as contributions that maintained or increased the value of existing property (for example, money that was spent to repair or remodel the marital home).

Indirect financial contributions

Indirect financial contributions are those that are used to acquire, maintain, or improve property that were not made by the spouse. Gifts that were given to a spouse or an inheritance received by the spouse are examples of indirect financial contributions.

Indirect contributions are usually treated as a contribution made by the spouse who received them. For example, if a spouse’s parents make a gift of property to a married couple, the property will be treated as having been contributed by the spouse whose parents made the gift.

Negative financial contributions

For the most part, financial losses are shared by the parties in the same way that financial gains are shared. If one spouse has deliberately or recklessly reduced the value of the property pool, however, the loss can be subtracted from that spouse’s financial contribution.

Examples of negative financial contributions may include:

• The deliberate destruction of property in order to harm the interests of the other spouse.
• Excessive gambling losses (particularly if the other spouse objected to the gambling).
• Excessive consumption of alcohol or drugs leading to financial losses.

Reasonable losses from gambling or alcohol consumption are generally treated as a hobby. When they become unreasonable, however, a court can regard them as waste and can treat them as reducing the party’s financial contributions to the marriage.