How to safeguard future finances after a separation

May 17, 2022

Life after separation is not always predictable.  However, as our recent article illustrated, it is important to formalise property settlements to ensure future financial protection.

A recent case has illustrated that the alternative can be risky, particularly if your ex wins the lottery!

The 2021 decision of Oxley & Oxley [2021] FedCFamC1A 98 reinforces the protection provided by formalising property settlements, whether this be by consent orders or a financial agreement – even where parties reconcile afterwards.

The case

 A married couple separated in 2013 and formalised their property settlement by consent orders in 2014. Two years later, they reconciled, and started living together again in 2017.

In 2018, the husband won a ‘Set for Life’ lottery, receiving $20,000 each month for the next 20 years. After the win, the couple opened a joint bank account and purchased a property in joint names, ‘retiring’ and travelling together.

In 2019, the couple separated again.  The wife then made an application to set aside the 2014 property consent orders on the basis that there was “implied consent” to set aside these orders as a result of the reconciliation, the husband’s promise to share the lottery winnings, the acquisition of joint property and their shared retirement and travels.

The wife’s application failed as the court found, notwithstanding the reconciliation, she had not contributed to the purchase of the property nor to the joint account, as these were solely funded by the husband’s winnings, which were a windfall to the husband alone after the 2014 orders were made.

As the wife’s attempt to set aside the 2014 orders was unsuccessful, the court’s jurisdiction to deal with financial matters between the parties was exhausted, leaving the wife to look to a potential property law claim against the husband in relation to the jointly held property.

The lesson

Had the parties not formalised their property settlement in 2014, there is little doubt the wife would have received a significant share of the husband’s lottery winnings and the assets acquired from these winnings as part of a property settlement.

Having formalised their property settlement meant the wife received none of this.

Lottery winnings, like many events in life, is an unpredictable event.  The protection provided by formalising financial matters after a separation by consent orders or a financial agreement is one way to move forward freely, and minimise the risk of a future claim if unpredictable events occur.