What Are Financial Resources In Family Law?

financial resources family law

By Ezra Sarajinsky

· Read time: 7 minutes

A financial resource in family law refers to any asset, income, or financial benefit that can be considered when determining property settlements, spousal maintenance, and child support.

Understanding the various types of financial resources and their impact on family law matters is essential for anyone going through a separation or divorce. This article will provide a comprehensive overview of what constitutes financial resources, how they influence legal decisions, and the obligations for disclosing them. By the end, you’ll have a clear understanding of the role financial resources play in family law.

Understanding Financial Resources in Family Law

Financial resources encompass a broad range of assets and income streams that can significantly influence the outcomes of family law proceedings. These resources are not limited to tangible assets like real estate or vehicles but also include intangible assets such as superannuation, shares, and even future earning potential. Understanding the full scope of financial resources is crucial for equitable settlements and support arrangements.

Types of Financial Resources

Tangible Assets: These include physical items such as real estate, vehicles, and personal property. The value of these assets is often straightforward to determine through appraisals and market assessments.

Intangible Assets: These are non-physical assets like shares, intellectual property, and business interests. Valuing these can be more complex and may require expert financial analysis.

Looking for assistance with your property settlement?

View our property settlement package

Income Streams: Regular income from employment, rental properties, or investments falls under this category. This also includes irregular income such as bonuses, commissions, and dividends.

Trusts and Inheritances: Trusts and inheritances can be contentious in family law matters. The court will examine the nature of these resources, including whether they are accessible or discretionary, to determine their relevance in the settlement.

Disclosure Obligations

Both parties in a family law matter are legally obligated to fully disclose all financial resources. This transparency is essential for fair and just settlements. Failure to disclose can result in legal penalties and may significantly impact the outcome of the case.

The difference between property and a financial resource in family law

Property generally refers to tangible assets such as real estate, cars, and personal belongings, as well as intangible assets like shares, bank accounts, and choses in action (rights to sue or recover debts).

While a financial resource can be thought of as future entitlements or benefits that might not yet be in the someone’s possession – for example an anticipated inheritances, potential bonuses, or a person’s earning capacity.

This distinction is important because property is typically subject to division between parties, while financial resources may influence the distribution (while not being possible to be directly divided).

How Financial Resources Impact Property Settlements

The impact of financial resources on property settlements in family law cannot be overstated. The Family Law Act 1975 (Cth) mandates that the court must consider the financial resources of both parties when making property settlement orders.

This comprehensive evaluation ensures that the division of assets is just and equitable, reflecting the financial circumstances of each party.

Equitable Distribution

The principle of equitable distribution is central to property settlements in Australian family law. Unlike community property regimes, which split assets 50/50, equitable distribution considers a range of factors to determine a fair division. Financial resources play a pivotal role in this process. The court examines the total pool of assets, including both tangible and intangible assets, income streams, superannuation, and future earning capacity. By doing so, the court aims to achieve a balance that considers the contributions and needs of both parties.

Contributions and Needs

The court assesses both financial and non-financial contributions made by each party during the relationship. Financial contributions include income, investments, and asset acquisitions, while non-financial contributions encompass homemaking and child-rearing efforts. Additionally, the court evaluates the future needs of each party, considering factors such as age, health, and earning potential. Financial resources are integral to this assessment, as they directly influence the ability of each party to support themselves post-separation.

Adjustments for Disparities

In cases where there is a significant disparity in financial resources between the parties, the court may make adjustments to ensure a fair outcome. For instance, if one party has a substantially higher future earning capacity or access to significant financial resources, the court may award a larger share of the property pool to the other party. This approach aims to mitigate any financial disadvantage resulting from the separation and promote financial independence for both parties.

Impact on Spousal Maintenance

Financial resources also impact decisions regarding spousal maintenance. The court considers the financial resources of both parties to determine whether one party requires financial support and whether the other party has the capacity to provide it. This assessment includes a thorough examination of income, assets, and future earning potential. The goal is to ensure that both parties can maintain a reasonable standard of living post-separation.

By understanding how financial resources influence property settlements, individuals can better navigate the complexities of family law proceedings. Full disclosure and accurate valuation of all financial resources are essential for achieving fair and just outcomes.

The Role of Financial Resources in Child Support

Financial resources play a pivotal role in determining child support obligations in Australian family law. The primary objective of child support is to ensure that children receive adequate financial support from both parents, reflecting their respective capacities to contribute. The Child Support (Assessment) Act 1989 (Cth) provides the framework for calculating child support, taking into account the financial resources of both parents.

The assessment of child support begins with a thorough examination of the income and assets of both parents. This includes regular income from employment, investments, and any other sources, as well as tangible and intangible assets. The aim is to establish a comprehensive picture of each parent’s financial situation to determine their ability to contribute to the child’s needs.

Common Issues Regarding Financial Resources

Financial disputes are a common occurrence in family law, often arising from disagreements over the valuation, division, and disclosure of financial resources. These disputes can complicate the process of reaching a fair settlement, but understanding the common issues and potential resolutions can help parties navigate these challenges more effectively.

Disputes Over Asset Valuation

One of the most frequent disputes involves the valuation of assets, particularly intangible ones like business interests, intellectual property, and superannuation. Parties may disagree on the worth of these assets, leading to prolonged negotiations or litigation.

Disagreements on Income and Future Earning Capacity

Disputes often arise over the accurate reporting of income and the assessment of future earning capacity. One party may allege that the other is underreporting income or overestimating future financial prospects.

Non-Disclosure and Hidden Assets

Non-disclosure of financial resources is a significant issue that can undermine the fairness of settlements. Hidden assets or undisclosed income streams can lead to an inequitable division of property and support arrangements.

Disputes Over Superannuation Division

Superannuation is a complex financial resource that often leads to disputes, particularly regarding its valuation and division. The intricacies of superannuation law and the need for specialised advice can complicate settlements.

Trusts and Inheritances

Trusts and inheritances can be contentious, particularly when determining their relevance and accessibility in family law matters. Disputes may arise over whether these resources should be included in the property pool.

Resolution Strategies:

  • Legal Clarification: Courts can provide legal clarification on the status of trusts and inheritances, determining whether they are accessible or discretionary and how they should be treated in settlements.
  • Negotiated Agreements: Parties can negotiate agreements that consider the unique nature of trusts and inheritances, ensuring that these resources are fairly accounted for in the overall settlement.


If you need assistance with understanding or managing your financial resources in a family law matter, book a consultation with a MovementLegal team member. Our experienced professionals are here to provide the guidance and support you need to achieve a fair and just resolution.

Book a free 15 minute call

Contact us for an obligation-free, 100% confidential chat.

Book a call

Need help with your separation?

Our separation packages make the process easier and more affordable.

Book a call