Introduction: Why protecting assets matters

Divorce or separation can have significant emotional and financial consequences. Beyond the emotional toll, there are serious financial consequences. Property settlements under the Family Law Act 1975 (Cth) can include homes, businesses, superannuation, inheritances and even family trusts.

Many people therefore ask how to protect assets from divorce or how to safeguard assets if a relationship breaks down. While the law requires a fair division of property, there are legal strategies available to reduce risk and safeguard your financial future.

This guide explores practical options, including prenups, postnups and family trusts, and explains how lawyers can help you navigate asset protection during divorce.

How the law views property in divorce

The Federal Circuit and Family Court of Australia has broad powers to divide property following separation. When determining a settlement, the court considers:

1. Assets and liabilities: This includes property, businesses, superannuation, bank accounts, shares, cars and debts.
2. Contributions: Both financial (income, inheritances, investments) and non-financial (raising children, homemaking).
3. Future needs: Factors like health, earning capacity, age and care of children.
4. What is “just and equitable”: The final division must be fair in the circumstances.

Key point: Assets held in one person’s name can still be included in the property pool.

Strict time limits apply to property and maintenance claims. In most cases, you have 12 months from the date your divorce becomes final to start property settlement or spousal maintenance proceedings. De facto couples usually have two years from the date of separation.

Strategies to protect your assets

1. Prenuptial and postnuptial agreements

A Binding Financial Agreement (BFA) commonly known as a prenup (before marriage) or postnup (during or after marriage) is one of the strongest tools for protecting assets.

BFAs can be made before a relationship, during a relationship or after separation, provided both parties receive independent legal advice and the technical requirements in the Family Law Act are followed. Here’s what BFAs do:

• Sets out how property, superannuation and financial resources will be divided if the relationship ends.
• Legally binding if strict requirements are met, including independent legal advice for both parties.
• Particularly useful for protecting pre-existing assets, inheritances or family businesses.

Example: Someone entering a second marriage uses a prenup to ensure their children from a previous relationship inherit the family home.

Because small technical errors can make a BFA vulnerable to challenge, it is important to have it drafted and reviewed by an experienced family lawyer. You can use Bark to compare family lawyers who regularly prepare financial agreements and choose one who understands your goals.

2. Family trusts to protect assets from divorce

Using a family trust to protect assets from divorce can offer some protection, but it is not guaranteed. The court has the power to look through trust structures if one party effectively controls the trust.

• Discretionary trusts: If one partner is the trustee or primary beneficiary, the court may treat the trust assets as part of the property pool.
• Genuine third-party trusts: Trusts set up by parents or grandparents, where neither partner has control, may be harder to claim in a divorce.

Example: A family trust created by parents for multiple siblings, where no single spouse has control, may protect assets more effectively than a trust set up by one spouse alone.

The court will examine factors like who set up the trust, who can appoint or remove the trustee, who receives income and capital and how the trust has actually been used during the relationship.

3. Keep inheritances separate

If you receive an inheritance during your relationship, consider keeping it in a separate account rather than merging it with joint assets. While the court may still take it into account, keeping records can help show it was intended for your sole benefit.

Maintaining inheritances in a separate account and keeping clear records can strengthen arguments that they should be treated differently.

4. Document financial contributions

Keeping records is crucial. Evidence such as bank statements, property title deeds and loan agreements can demonstrate your contributions. This is particularly important for disputes about inheritances, gifts or family loans.

5. Businesses and asset structuring

If you own a business, structuring it correctly can reduce the risk of it being dismantled in a property settlement. Options include:

• Keeping business finances separate from personal accounts.
• Formal shareholder agreements to limit ownership disputes.
• Using company or partnership structures to demonstrate separation between personal and business assets.

6. Superannuation

Superannuation is treated as property and can be split by the court. Strategies include:

• Keeping super separate when possible.
• Considering Binding Financial Agreements to clarify how super will be divided.

7. Post-separation planning

If you’ve already separated, you can still take steps to protect your position:

• Gather financial documents (bank accounts, super statements, business records).
• Avoid hiding assets, and this can lead to penalties and adverse court outcomes.
• Do not transfer, sell or give away assets without legal advice, as the court can sometimes undo or take into account transactions designed to defeat a partner’s claim. 
• Seek legal advice early to understand your rights and obligations.

How to protect your assets from your partner during the relationship

While it may feel uncomfortable, early planning is a sensible legal precaution. Speaking with a family lawyer early does not mean you expect the relationship to fail, it simply means you understand your legal position and are taking sensible precautions. 

You can quietly compare confidential quotes from asset-protection focused family lawyers through Bark if you want private advice.

Some strategies include:

• Entering into a Binding Financial Agreement.
• Maintaining some assets in your sole name (while understanding they can still form part of the asset pool).
• Avoiding joint debts where possible.
• Ensuring family loans are properly documented to prove they are repayable.

Common misconceptions about asset protection

• “If everything is in my name, my partner can’t claim it.” False. The court considers all property, regardless of ownership.
• “A family trust always protects assets.” Not necessarily. If you control the trust, the court can include it in the property pool.
• “Prenups are only for the wealthy.” Incorrect. Anyone with assets to protect, including small businesses, inheritances or property, can benefit from a BFA.

How lawyers can help protect your assets

Lawyers play a vital role in safeguarding assets before, during and after separation. They can:

• Draft Binding Financial Agreements that hold up in court.
• Advise on trust and business structures.
• Assist with documenting inheritances and contributions.
• Represent you in property settlement negotiations or litigation.

Example: A lawyer may recommend a BFA combined with a discretionary family trust to protect both inherited property and a family business.

If you would like to explore your options without obligation, you can post a brief on Bark and receive responses from experienced family lawyers in Australia specialising in asset protection and property settlements.

Conclusion: Plan ahead to protect your financial future

Divorce can create uncertainty, but there are legal strategies to protect your wealth. From Binding Financial Agreements to family trusts and careful handling of inheritances, proactive planning is key.

If you are looking for ways to protect assets from divorce or want to understand how to protect your assets from your partner before issues arise, the safest step is to work with an experienced family lawyer who can tailor a plan to your situation.

Bark makes it easy to compare lawyers, read reviews and choose someone you trust to help safeguard what matters most.