When couples separate, one of the biggest questions in property proceedings is: what happens if one party spends, gives away or distributes money before the property is divided?

For many years, the answer was simple, courts could “add back” that money into the property pool, as if it still existed. But with recent legislative reforms and cases like Shamon & Shamon [2025] FedCFamC1A 150 and Shinohara & Shinohara [2025] FedCFamC1A 12, the law has shifted. Courts are now far more cautious about treating spent funds as assets, preferring to deal with dissipation in other ways.

So, where does this leave separating couples?

Traditionally, add-backs allowed judges to notionally include money that had already been spent in the divisible asset pool. The most common examples were:

· Legal fees paid from joint accounts;

· Gifts or transfers to family or friends;

· Wasteful spending, such as gambling or luxury purchases;

· Premature distributions from trusts or companies.

The rationale was fairness and to stop one party from eroding the pool to the detriment of the other.

The Family Law Amendment Act 2024 (Cth), effective from 10 June 2025, now requires courts to identify only existing property interests when dividing assets. This means that notional “add-backs” of already-spent money are no longer part of the property pool itself.

The Full Court has confirmed that the Courts will no longer rebuild the pool with funds or money that no longer exist. Instead, the focus is on:

· Contributions (s 79(4)) – Did one party’s spending affect their overall contribution to the asset pool?

· Adjustments (s 79(5)) – Was money wasted or dissipated in a way that should justify an adjustment to the final division?

The Shamon Case: A Practical Example

In Shamon & Shamon, the husband withdrew over $1.3 million after separation, including large trust distributions and mortgage drawdowns. The trial judge declined to treat those sums as add-backs in the pool, but took the conduct into account when dividing property.

At hearing, the wife received 80% of the pool, with the husband’s post-separation spending weighed heavily against him. On appeal, the Full Court confirmed that this approach was correct. Spent money could not be added back to the balance sheet, but it could (and did) influence the court’s assessment of fairness.

What does this mean for separating couples?

· Add-backs are effectively abolished as a balance sheet tool.

· Dissipated money still matters, but its impact is felt through contribution findings or adjustments, not by inflating the asset pool.

· Evidence is everything, parties must trace transactions and explain how money was spent.

· Bad behaviour has consequences, if one party wastes or strips assets, the court can compensate the other through a higher percentage entitlement.

If you are separating, it’s vital to:

· Keep careful records of how you spend money after separation;

· Avoid making large gifts or distributions that could later be viewed as unfair;

· Seek legal advice before using joint funds;

· Act early if you believe the other party is dissipating assets. We may be able to file an application seeking injunctions that may help preserve the pool.

Add-backs are no longer about recreating money that has disappeared. Instead, the focus is on achieving a fair division by looking at contributions and circumstances.

Cases like Shamon show that while courts won’t pretend spent money still exists, they will ensure that reckless or unfair spending does not go unnoticed.