It is now six years since the Property (Relationships) Act significantly changed the property rights of both married and de facto couples. Over that time it has become common for couples to contract out of the Act through a Property Relationship Agreement. Unfortunately we have also had many clients who have regretted not putting such an Agreement in place.
Under the Act relationship property is divided equally between a couple who have been in a three year relationship unless there are extraordinary circumstances that make equal sharing “repugnant to justice”.
We have found that the Act’s equal sharing regime does not meet the needs of couples that have had prior relationships and wish to protect assets for themselves or their children.
However, the Act does provide a mechanism to enable a couple to make their own rules governing their property interests. This works on an “opt out” system. If a couple do nothing – that is if they do not make an Agreement – they will be covered by the equal sharing rules after the three year period. If they wish to avoid those rules then they must make an Agreement.
Sadly, the absence of such an Agreement often means that upon separation one party feels they and their children have lost assets and money brought into the relationship (often put into the family home). Furthermore, often the children of a former relationship have to make a claim under the Act in order to get their entitlements once their parent has died.
Consequently, careful planning is needed when entering into a new relationship and a sure way of protecting your assets for yourself and your children is by entering into a Property Relationship Agreement.
A Property Relationship Agreement has certain procedural requirements. It must be in writing and each of the couple must be independently advised by separate lawyers. If the procedural steps are followed then a Court can only overturn an Agreement if enforcing the Agreement would cause “serious injustice”.
It is then important to update the Agreement from time to time. An Agreement that was fair at the beginning of a relationship may not be fair after a number of years and particularly where there are children.
If you want your assets protected for yourself and your children you need to take the initiative and get advice from your solicitor. If you have any doubts about your rights or any queries at all please call me.
