Family Law Amendment Act 2023

On May 11, 2023, the Family Law Amendment Act came into effect. One notable change is the treatment of excluded property transferred to a spouse.

Excluded property are assets a party may claim exempt from division as family property, which include pre-relationship assets and gifts or inheritance recived by a spouse. Over the past decade a hotly contested issue in family cases was whether an excluded asset remain excluded after it is transferred to a spouse. The overarching principle from the caselaw was to look to the intention of the transferring spouse to determine whether they intended a gift or sharing of the exclusion to the other party. The amendments to section 85 of the FLA is an attempt to end the uncertainty on this issue by expressly preserving a party's excluded property despite a transfer of  that property to a spouse. These changes do not apply to any pre-existing family proceedings started before the amendments were enacted (May 11, 2023) or cases started after that date but to vary a family agreement that was entered into before the amendments.

The amendments are otherwise applicable to all cases commenced from May 11, 2023 onward. It will be interesting to see how litigants and family lawyers react to the changes and whether there will be a shift in strategy and litigation over the discretionary provisions in the Family Law Act that allow unequal division of family property, and division of excluded property when it is significantly unfair not to do so. Presumably those sections would be another avenue for spouses to seek a greater division of assets notwithstanding excluded property claims.