What a recent change to family law means if you are separating and a business is part of the picture.

If you are separating from a partner, and a business you own, or your partner owns, forms part of what needs to be sorted out, there is a change in family law worth understanding. It will not decide your outcome. It may well change how that outcome gets worked out.

For close to twenty years, family law had a fairly well understood safety net. If one party spent, hid, or otherwise ran down assets before a separation was finalised, perhaps on legal fees, perhaps in some other way, a court could effectively add that value back into the pool, as though it still existed, before dividing everything up. It was not a perfect solution, but it gave people a path to a fair outcome even when money had already moved.

That safety net no longer works the way it used to.

The Family Law Amendment Act 2024 came into effect on 10 June 2025, and in July of that year, the Full Court of the Federal Circuit and Family Court of Australia handed down a decision confirming that funds which no longer exist at the time of a hearing generally cannot simply be added back into the property pool. The case involved money that had already been spent on legal fees, not a business, but the reasoning behind it applies more broadly to anything that has been spent, moved, or reduced before matters are finalised.

I am not a solicitor, and this is not legal advice. Your solicitor is the right person to explain exactly how this applies to your matter. What I can offer, from where I sit as a valuer, is what this means practically once a business is involved.

Here is why it matters. A business gives people far more ways to quietly move assets and liabilities away than a bank account does. Income can be deferred. Invoicing can be delayed or accelerated. Distributions from a family trust can be directed differently than usual. Retained earnings that would ordinarily sit in the company can be spent. None of this needs to be dramatic or obviously dishonest to affect what a business is genuinely worth as at the date that matters.

Previously, if this kind of thing happened in the lead up to a separation, there was a reasonably direct way to correct it after the fact. That is no longer guaranteed. The financial reality of what happened inside a business now carries more weight earlier in the process, through proper evidence and a defensible valuation, rather than through an adjustment argued for once the numbers are already on the table.

What this means for you, practically, if separation is on the horizon and a business is involved: the timing of a valuation may matter more than it used to. Additionally, I believe that very soon, the courts will be asking  “business valuations” to perhaps identify and quantify the effects of intentional or reckless material wastage. Therefore, a  valuation commissioned early, close to the point of separation, can give a far clearer and more defensible picture of what the business is actually worth and how it is actually being run.  This step should be prioritised, rather than commissioning the assignment much later, after months of ordinary business activity have blurred the picture.

If your solicitor has recently suggested getting a business valuation earlier than you expected, this is very likely why. It is not caution for its own sake. It is a sensible response to a genuine shift in how these matters are now approached.

If you are separating and a business is part of what needs to be worked through, an early, independent valuation gives you and your solicitor something solid to work from. Call me directly on 1300 551 757.

~ Kevin Lovewell