The erosion principle family law refers to the idea that the significance of an initial financial contribution, such as pre-marital assets or inheritances, can diminish over time within a long-term relationship.

When determining a property settlement after separation or divorce, the Family Court considers not only who brought what into the relationship but also how contributions evolved throughout the marriage.

Over time, non-financial and homemaking contributions can reduce the weight of initial financial contributions.

How Does the Erosion Principle Apply to Property Settlements?

If you entered a relationship with significant assets—such as property, savings, or investments—you might expect to retain a larger share of those assets in a separation.

However, under the erosion principle, the court acknowledges that financial contributions made at the beginning of a marriage can lose significance, particularly in long relationships where both partners have contributed in various ways.

For example, if you brought $500,000 into a marriage that lasted 20 years, but your partner contributed through homemaking and child-rearing while you both built wealth together, the court may determine that your initial contribution has been “eroded” by the combined efforts during the marriage.

Key Takeaway: Your initial financial contributions may carry less weight in a long-term relationship, as the court considers all contributions over time.

Factors That Influence the Erosion Principle

The way the erosion principle applies to your property settlement depends on several factors, including:

• Length of the relationship: The longer the marriage or de facto relationship, the more likely initial contributions will be diluted.
• Joint financial efforts: If you and your partner combined resources, made investments together, or improved assets, the court may see this as shared growth.
• Non-financial contributions: Parenting, homemaking, and emotional support are recognised contributions that can impact asset division.
• Changes in asset value: If a property or investment has significantly increased in value due to joint efforts, this can also influence how it is divided.

Each case is assessed individually, and the court aims to achieve a fair and just outcome based on contributions from both parties.

Key Takeaway: The length of the relationship, joint efforts, and non-financial contributions all play a role in how the erosion principle affects property division.

Short vs Long-Term Relationships: Does the Erosion Principle Always Apply?

In shorter relationships, initial contributions tend to retain more weight. If you were in a marriage or de facto relationship for only a few years, the court is more likely to recognise your pre-marital assets as significantly yours.

However, if the relationship lasted a decade or more, the erosion principle is more likely to be applied.

For example:

• Short relationship (under 5 years): If you owned a house before the relationship and your partner made little contribution, you are more likely to retain most of its value.
• Medium-term relationship (5–10 years): Your partner’s contributions may be acknowledged, particularly if they helped maintain or improve assets.
• Long-term relationship (10+ years): Initial contributions often hold less weight, as the court considers shared efforts and growth over time.

Key Takeaway: The shorter the relationship, the more likely your initial assets will remain yours. Longer relationships see a greater balancing of contributions.

Can You Protect Your Initial Contributions?

If you are entering a relationship with significant assets, you may want to safeguard them in case of separation. Some options include:

• Binding Financial Agreements (BFAs): Also known as prenups or postnups, these legally binding agreements can outline how assets will be divided in case of a breakup.
• Keeping assets separate: If you keep pre-marital assets in your name and do not mix finances, they may retain more value in a settlement.
• Documenting financial contributions: Maintaining records of what you brought into the relationship can help establish your case in court.

While these strategies may help, they do not always guarantee protection, especially in long relationships where the erosion principle applies.

Key Takeaway: Legal agreements and financial separation can help protect initial contributions, but long relationships may still impact asset division.

The erosion principle family law plays a significant role in property settlements, particularly in long-term relationships. If you are separating, understanding how the court assesses contributions over time can help you manage expectations.

Seeking legal advice and considering financial agreements early in a relationship can also provide clarity on asset protection.