Separation and Money: Why What’s Gone Is Gone in Today’s Family Law

What the Latest Court Decision Means for Your Property Settlement

Shinohara v Shinohara [2025] the Case in a Nutshell

A recent case called Shinohara v Shinohara [2025] has changed the way Australian family courts look at dividing property after separation.

The couple in this case had been married for only a short time and had a modest pool of assets. During their separation, money from the sale of an investment property was spent, mostly on legal fees. In the past, courts often used a concept called “add-backs,” which meant they could treat that spent money as if it were still sitting in the property pool to be divided.

But in Shinohara, the appeal court made it clear: those days are over.

What Are Add-Backs?

Think of add-backs as a way of pretending money is still there, even if it has already been spent.
For example, if one partner withdrew $50,000.00 from a joint account and spent it, the other partner could argue it should be “added back” to the property pool. The Court could then proceed as though the money still existed, and could account for this in any property division.

This used to help people seek relief when one party had “run-down” assets.

What Has Changed?

When the Full Court was required to make a decision in Shinohara, they adopted the view that the amendments to the legislation (which came into effect in late 2024) say that the court can only divide up the property that actually exists at the time of the hearing—your bank balances, superannuation, real estate, shares, etc, saying at [121]: 

“The text of s 79(3)(a)(i) is clear. Only the existing property of the parties is to be identified, and only that existing property is to be divided or adjusted.”

That means no more add-backs. If money has been spent, it’s not coming back into the pool as an asset.

Instead, the court can still consider the expenditure or wastage of assets in a different way. If someone has used their money irresponsibly or unfairly (for example, making large withdrawals, gambling, or spending heavily on themselves), the judge can take that behaviour into account when determining if an outcome is just and equitable.

Why This Matters to You

If you’re separating, this decision has a few important consequences:

1. What’s gone is gone.
   If your partner has spent money, the court won’t add it back into the pool. The focus is on what assets are left today.
2. Behaviour still matters.
   The way money has been spent during the relationship or after separation can still impact the outcome. If one partner wasted assets, the judge may adjust the division to balance things out.
3. Be prepared with evidence.
   Bank statements, loan records, and proof of how money was used are more important than ever. The court won’t “rebuild” the pool, but it can still weigh those facts when deciding a fair split.
4. Expect a more practical approach.
   The focus will be less on complicated accounting (like add-backs) and more on equity and fairness in the here and now.

What to Do if You’re Separating

• Get advice early. Understanding your financial position—and your partner’s—is key.
• Keep records. Hold onto statements, receipts, and any documents showing where money went.
• Be realistic. Don’t expect the court to “replace” spent money but know that irresponsible behaviour can still affect the overall split.
• Focus on the present. The judge will divide what exists at the time of trial, not what once existed.

Final Thoughts

The Shinohara v Shinohara decision signifies a significant shift in Australian family law. For those involved in separation, it moves the focus from recovering spent funds to prioritising fairness by assessing each person’s contributions, how the money was spent, and what both parties need moving forward.

If you are contemplating separation or going through divorce, get in touch with the team at Resolve Conflict to discuss your circumstances. We provide a free 15-minute consultation to help clients understand their options.