Understanding ‘add-backs’ in family law: how courts protect fairness in asset splits

When couples separate, dividing assets is rarely straightforward. Complications arise when one party has used, disposed of, or hidden assets before a settlement has been reached. The legal concept of "add-backs" allows courts to account for those assets by "adding back" funds into the asset pool. As legislative reforms approach in mid-2025, understanding the nuances of add-backs is essential for anyone involved in property settlements.

The recent case of Boulton & Boulton (Boulton) highlights the complexities of add-backs. In that case, over $3 million of add-backs proposed by the wife were disputed by the husband. The court eventually added back $1,256,400 to the asset pool, which included:

• $60,200 paid by the husband to his brother's company for what the court deemed to be an illegitimate invoice;
• $596,000 from the sale of a property in 2017; and
• $600,000 withdrawn by the husband from a joint account.

What can be added back?

There are three main categories of add-backs:

1. Money spent on legal fees;
2. Where there has been a premature distribution of assets, and property that has been disposed of or used for the benefit of one party; and
3. Property not disclosed or accounted for, including conduct designed to intentionally, recklessly or negligently reduce the value of an asset.

What happened in Boulton?

In the Boulton case, the primary judge noted that extensive use of add-backs can skew the appropriate distribution of property, and that the Court's preference is to instead address those issues under s75(2)(o) of the Family Law Act 1975 (Cth) ("The Act"), which allows the court to take into account any fact or circumstance that the justice of the case requires. Interestingly, the case of Trevi & Trevi confirmed that when legal fees are paid from property that would otherwise be included in the asset pool, those amounts are almost always added back.

The primary judge in Boulton accepted some of the wife's proposed add-backs and rejected others. One significant add-back was $600,000, which the wife claimed the husband had withdrawn from a joint account in 2010, 11 years before they separated. The husband claimed it was unfair and onerous for the Court to expect him to undertake a tracing exercise that far back. However, the Court held the husband did not provide a satisfactory explanation for the dissipation of $600,000, leading the judge to infer the husband had retained the benefit of the funds.

Key takeaways

Boulton confirms that when seeking to add money back into the asset pool, or when opposing an add-back, it is crucial to ensure that all relevant evidence, no matter how historic, is presented to the Court during evidence-in-chief.

Impending amendments to the Act

The legislative amendments coming into effect on 10 June 2025 revise the relevant sections of the Act in relation to property matters and may change the way the court addresses add-backs.

The treatment and consideration of add-backs can be complex, particularly as family lawyers will soon be navigating substantial legislative reforms.

For assistance or more information on how add-backs may be considered or treated in your circumstances, please contact our experienced Family & Relationship Law team.