Protecting your assets without being a prick

The first piece of "asset protection advice" I got was from a bloke at a barbecue who told me to start moving cash into a mate's account before my wife found out we were separating. He said it like he was passing on a tip about cricket. I nodded politely and went and got another beer.

Six months later that same advice would have ruined me. Family Court has subpoena power, forensic accountants are real, and the legal term for what he was suggesting is "asset dissipation". The penalties range from adverse inferences (the court treats hidden assets as if they're still in the pool) to actual contempt charges. I've watched a man's career end over $40k of suspicious transfers. Not worth it.

There is, however, a legitimate version of protecting yourself. It's mostly about record-keeping, structure, and timing. None of it involves lying.

The clean version, in order

1. Document what you brought in.

Pre-marriage contributions matter under step two of the s79 process. The longer the marriage, the less they weigh, but in shorter marriages or where the contribution was significant, they can shift the percentage materially.

You need evidence:

• Bank statements showing the savings you held the day you married.
• Settlement statements for any property you owned pre-marriage.
• Inheritance documentation (date, amount, executor letters) for anything received during the marriage.
• Gift documentation from family (parents who chipped in for the deposit, especially).

If you can't prove it, the court can't credit it. A decade later your memory of "I put in $80k" without a paper trail is worth nothing in mediation.

2. Keep your tax affairs immaculate.

ATO records are evidence. Late lodgements, undeclared income, dodgy deductions all surface during disclosure. Get current. If you're behind, fix it before separation if you possibly can. After separation it becomes ammunition.

3. Disclose, fully and early.

Counterintuitive, but the cheapest path is total disclosure. Hidden assets get found. The cost of finding them comes out of you (forensic accountants, subpoenas, legal hours). Once trust collapses, every other line item gets dragged through the same forensic process. A clean disclosure, on day one, narrows the dispute to the things that are actually disputed.

4. Don't dissipate.

Don't sell the boat to your brother for $5k. Don't take a $40k "loan" from your business and move it offshore. Don't pull cash advances on the credit card and put them in a safe. Don't gift the bike to your dad. Any transfer in the 12 months before separation, and often longer, gets scrutinised. Genuine pre-existing transactions are fine. Anything that smells of asset shifting will be added back into the pool, and your credibility will be cooked for the rest of the matter.

5. Use the right structures, properly.

Family trusts, companies, SMSFs, all legitimate. They don't make assets immune from family law, but they affect how assets are valued and treated.

• Trust assets where you're a beneficiary or appointor are usually treated as property of the marriage (the "control" test).
• Company assets where you're a director / shareholder are property to the extent of your interest.
• SMSF assets are property and subject to super-splitting orders.

Setting these up after separation looks exactly like what it is. Setting them up years before, for genuine reasons (tax, business, succession), is normal and defensible.

6. Understand binding financial agreements.

A Binding Financial Agreement (the Australian equivalent of a prenup or postnup) can quarantine specific assets. It's a separate piece. Has to be properly drafted, both parties have to get independent legal advice, both have to sign certificates. Costs $3,000 to $10,000 to set up properly. Often challenged, sometimes successfully, on procedural grounds. Worth it for genuinely significant pre-marriage assets, family business interests, or where there's a large disparity in wealth coming in. Not worth it for a $400k pool.

Things to actually do, in the first month after separation

This is the practical list. Same week as the conversation, ideally.

• Open a new sole bank account (with a different bank from the joint one) and have your salary redirected. Your existing salary continuing into a joint account is fine; your new pay should land somewhere only you can access.
• Stop joint credit cards. Cancel the additional card or the joint facility. Don't run the joint card down to zero on a holiday. Don't max it out. Just freeze the position.
• Photograph everything in the house, room by room. Date-stamped on your phone. This is the inventory list, not for disputing each item, but for knowing what was there at separation.
• Photograph the contents of any safe, garage, workshop, shed. Same reason.
• Save the last 12 months of every joint bank statement to a private cloud folder. Once she's got her own lawyer, access can disappear.
• Get a copy of the marriage certificate and the kids' birth certificates. Don't assume you can grab them later.
• Check your super and life insurance beneficiary nominations. Don't change them yet (talk to a lawyer about timing), but know what they say.
• Update the executor / power of attorney if your spouse is currently named. Talk to a lawyer first.
• Tell your accountant. Quietly, factually. They need to know to keep your tax affairs clean and to be ready for disclosure.
• Don't tell your employer's payroll unless it materially affects your tax situation, but do tell HR if there's a leave or salary-sacrifice arrangement that depends on marital status.

Things to never do

• Hide assets. Already said it. Will say it again.
• Run up debt punitively. Maxing the joint card to "spend it before she does" creates joint liability and gets added back into the pool against you.
• Make large gifts. To your parents, your kids, charity, anyone. Looks like dissipation.
• Withdraw cash for cash's sake. Bank statements show large withdrawals. The court will ask where the money went.
• Sell things at undervalue. The bike to your mate for $2k when it's worth $8k is going to be added back at $8k.
• Move money offshore. Forensic accountants exist. Disclosure obligations cover overseas accounts. The penalties are severe.
• Lie on financial statements. It's a sworn document. Lying on it is perjury.

On the inheritance question

A common one: "My mum left me money during the marriage, do I have to share it?"

Inheritance received during a marriage is in the pool, but it's specifically credited as your contribution at step two. The longer ago you received it, and the more it's been mixed into joint assets (used for the mortgage, the renovation, the family holidays), the more it gets absorbed. The more recently received, the more clearly identifiable, the better you preserve the contribution credit.

Don't immediately tip an inheritance into the joint mortgage offset if there's any chance the marriage is in trouble. Park it in a sole account. Keep the documentation. Use it for joint things by deliberate choice, not by default.

On the family business

Specialised territory. The short version:

• Genuine pre-marriage business value is a contribution. Document it.
• Goodwill built during the marriage is joint, even if she never worked in the business.
• A sole-director Pty Ltd is not a wall. The shares are property.
• Get a forensic business valuer involved early if the business is material. Both sides will instruct one anyway.

The principle

Asset protection in family law isn't about hiding. It's about knowing what's yours, proving what you contributed, behaving cleanly throughout, and getting the right structures and agreements in place at the right time (mostly, before things go bad).

Document, disclose, don't dissipate.