Separation & Relationship Property
Generally, if you have been living with a partner (de facto) for 3 years or more, as a married couple would do; are married; or in a civil union partnership and your relationship ends by means of separation, you will be affected by the Property (Relationships) Act.
The Act presumes that those within a relationship as described above, contribute equally to the roles in everyday living. This may look like one partner working full-time, while the other takes care of the household duties or parenting if you have children; or both partners may be working and contributing to different household duties. Whatever the circumstance, the Act aims to provide an equal division of assets and liabilities when the relationship ends. However, if you have any dependent children, their needs will also be taken into consideration, including who will manage day-to-day care, if this is not shared equally, this may affect the division of relationship property.
Whilst many people perceive the discussion of division of property, should the relationship end, as untrusting or perhaps a sign your partner is not as devoted to the relationship as would be desired, it is an important discussion every person in a relationship should have. When you love someone dearly and they have been a big part of your life, in the event of separation, it can be a very trying and demanding time, which can have a large impact on your emotions and sometimes your perception of the person you once shared a life with. At this time, you will have wished you had in a place a plan for the division of relationship property to make separation as easy and amicable as it could be. Should you have dependent children, this is even more important, to help preserve the relationship and make co-parenting easier, for the best interests of the children.
Should a relationship end by separation and an agreement has not been put in place as to the division of relationship property, or in order to contract out of the Act, it can be costly to engage with lawyers to create an agreement after separation. Should an agreement not be met after separation, it is very costly and time consuming to go through Court system for an Order as to the division of relationship property. The Court then also has discretion to award things such as spousal maintenance if one party will be worse off than the other as a result of the division of functions during and after the relationship. For example, if one party had the ability to be earning a decent income but left their job or reduced their hours to look after children, while the other maintains their job. In doing so the Court may also consider the likely earning capacity of each partner and their daily responsibilities within the relationship, to determine if compensation is owed by one party to the other to account for this, otherwise referred to as economic disparity.
The only way to protect yourself and any assets is to contract out of the Property (Relationships) Act, otherwise known as a contracting out agreement, or a ‘prenuptial agreement.’ An agreement can be made to specify certain property, income, chattels or any other property which is to remain the possession of a certain person of the relationship. This agreement can apply throughout the relationship, until one party dies, or even after death.
To read more about contracting out of the Property (Relationships) Act, read my blog on contracting out agreements.