Property Sharing in New Relationships
It can often be difficult to tell whether you’re in a qualifying relationship that might trigger the equal sharing provisions of our relationship property laws. Many enter into new relationships, thinking their relationship is more of a close friendship, rather than something akin to marriage. The trouble is, should that relationship end, the other person (and/or their family) doesn’t always agree. Assets you own (even if they’re in your sole name) could be subject to a claim which can have a serious financial impact on retirement plans.
Under the Property (Relationships) Act 1976 (“the Act”), a qualifying de facto relationship is defined as being a relationship of three years or more. In determining whether a de facto relationship exists the Court takes into account various factors listed in the Act. You might be surprised to learn that you can be held to be living together even though you don’t share the same residence. In certain circumstances physical intimacy is also not a precondition of living together.
If your relationship does qualify under the Act, the starting point for the sharing of relationship assets is 50 / 50. That may not be what either of you want or intend so it may be worthwhile for you and your partner to consider entering into a written agreement to determine how assets will be dealt with should your relationship end. The Act makes specific provision for contracting out of its consequences. This is something you should discuss together in the early stages of your relationship so both parties understand and agree on what will happen should you separate or become unable to fully participate in joint decision making.
To comply with the Act any Agreement requires certification by two independent lawyers. In practice they will draft an Agreement to reflect the outcomes you want to achieve against a background of the Act. You and your partner must see and be advised by different lawyers. This ensures that both parties get the correct advice and understand exactly what is contained in the Agreement before signing it.
Significantly, the Act also affects the division of property on the death of a spouse or de facto partner. A surviving partner has an option of whether to accept an inheritance under the Will of the deceased partner, or make a claim under the Act for their share of the relationship property.
The golden rule in all cases is to get good advice so that you have peace of mind in all your arrangements as you approach and enjoy your retirement.
At Harmans we have a specialist Family Law Team who can assist with contracting out agreements and discuss any relationship property questions you may have. Give Harmans a call on 352 2293.