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Relationship Property Forum
The new Property (Relationships) Act will apply to anyone who is married or who lives together in a de facto relationship. Here we answer questions regarding aspects of the new Act and how it may effect the relationship you are in.
What is a De Facto Relationship?
It is a relationship where two persons who are not married to one another and are aged 18 years or older live together as a couple. The term de facto relationship is defined to include relationships between people of the same sex. In determining whether they "live together" the following factors are relative:
- How long have they been together?
- Do they live in the same home?
- Is there a sexual relationship?
- To what extent is the money shared?
- Do they own anything together?
- Is there a commitment to shared lived?
- Are there children (not necessarily of the relationship)?
- Do they both undertake household duties?
- Do they give the image and impression of being a couple?
Not all of these factors need to be in existence for the Court to determine that they "live together". It is possible that the Court may find that there is a de facto relationship even if one of the parties did not consider there was such a relationship.
Should I consider a "Contracting Out Agreement" under the Act?
Unless you want the equal sharing provisions of the Act to apply to the family home, family chattels and other relationship property then you need to consider a Contracting Out Agreement. There is the risk, without such agreement, that assets you consider to be your separate property may, in fact, be relationship property in terms of the Act.
It would be prudent to contact us immediately to clarify your situation and have us prepare a Contracting Out Agreement, if required.
Are "Contracting Out" agreements complicated to prepare?
The length of time to prepare an agreement varies depending upon the value and type of property you have and nature of your relationship (for example whether or not there are any children). Most clients are however surprised at how much easier agreements are to prepare than was expected by them.
How much do they cost?
Again this depends upon the time taken because of the facts involved in each clients situation. Most agreements normally cost between $350 - $900 plus GST and disbursements. It should be noted that your partner will also need independent legal advice for which there will be an additional charge.
Can we change our agreements later on if we want to?
The agreement may be altered if both parties agree. The new agreement must be prepared and executed in the manner set out by the Property (Relationships) Act if it is going to be effective.
Do I need a lawyer to do an agreement?
Everyone entering into an agreement must have been advised by a lawyer before the agreement will be binding upon the parties. Each party must have independent legal advice.
I am considering living with my friend who has a child. Are my assets protected if we cease to live together within the next 3 years?
If the relationship between your friend constitutes a de facto relationship (as defined by the Act) and the relationship lasts for over 3 years then the starting position will be for an equal division of all property owned by you both. If the relationship ends within 3 years however, the Court will instead look at what you have contributed to the relationship in terms of property. Depending upon the circumstances it is much more likely that the Court would give consideration to the property that was brought by each party to the relationship. The Court can however also consider non financial contributions which have been made to the relationship and if they believe it fair to make an award to one party from the property brought by the other to the relationship. The person trying to get this award from the other party must prove to the satisfaction of the Court that it is fair for them to do so.
If however the partner’s child is deemed to be a child of the relationship the Court may order that all relationship property be divided equally even if you have been together for less than three years.
We lived together for 2 years and have now been married for 18 months. Can my partner claim for a share of the assets, which I owned when we got married?
After the relationship has been in existence for more than 3 years there is a presumption of equal sharing of all relationship property. In very broad terms "relationship property" is all that property which has been acquired by the parties during the relationship, or alternatively has been used by the parties during the course of their relationship.
There will be no distinction under the new Act where the parties have been in a de facto relationship or a marriage, thus where they have lived together for over three years it is reasonable to expect that the property would already have been divided equally if it comes within the definition of relationship property.
We have lived together for 10 years. Throughout that time I have worked whilst my partner has stayed at home caring for our children. The assets we have are as a result of my income. If we cease living together will my partner get any of my assets?
In dividing the property between the parties at the end of a relationship the Act states that there is no distinction between financial and non financial contributions under the Act. Thus the money earned by one party during the relationship is unlikely to be given greater priority than the services provided by the other in staying home to look after the children.
Further, under the new Act it is possible that if one person is unable to work due to the need to care for the children of the relationship a Court may order that that party takes more than half of the relationship property, or order that the working party pays spousal support to the child caring party.
My friend and I are considering living together. However, we both have adult children from previous relationships. I want to ensure that my children inherit my assets. What can I do?
You will need to have a Contracting Out Agreement pursuant to the Act. That Agreement can specify what is to be treated as "relationship property" and, more importantly, what is to remain as your "separate property".
It is equally essential to update your Will at the same time?
You need to have a signed Agreement and Will before you start living together. Without them, the likelihood is that all of your assets will be treated as "relationship property". In that case, your children may not inherit your assets as you obviously intended.
My partner has just died. In the Will everything has been left to my partner’s children. How can I challenge that?
Provided that you have lived together in a de facto relationship (as defined by the Act), then you have two options:
- Elect to make an application under the Act for a division of "relationship property" (Option A procedure); and/or
- Make an application pursuant to the Family Protection Act / Testamentary Promises Act.
Subject to the length of the relationship and what assets would be classified as "relationship property", the choice of options will largely depend upon the value of the assets concerned.
There is a time limit to elect "Option A" of 6 months after the date of death of the deceased partner.
It certainly would have been prudent to have signed a Contracting Out Agreement whilst your partner was alive as this would have avoided the need to take Court action now.