There is a lot of confusion about what happens when two people start living together.
When two people move in together, in what may be considered to be a genuine domestic relationship, there is a good chance that such a relationship will result in certain rights to the property of each of the parties being established under the Family Law of Australia. Whether such rights existed would depend on consideration of the particular circumstances of the relationship. Some factors which would be considered are:
- The length of the relationship;
- Whether a sexual relationship existed;
- Whether there are any children of the relationship;
- The degree of financial dependence between the parties and mutual commitment towards a shared life;
- The ownership, use and acquisition of the parties’ property;
- The reputation and public aspects of the relationship; and
- The degree of mutual commitment of the parties to a shared life.
When Can You Protect your Property?
You can take steps to protect the assets held by parties of the relationship. The steps that need to be taken to protect the property held by each of the parties of a relationship must be agreed between the parties. For this reason, it is best to arrange for such agreements to be made when the parties are still together rather than after the relationship has broken down, as agreement is often much more difficult to reach after a relationship has broken down. Agreement on what each party brings to the relationship and what each party will retain if the relationship were to end is usually easiest to agree upon before the relationship has started. If the parties have already commenced living together, it is still possible to take steps to protect the assets held by the parties. If the parties have not taken action to protect their assets and arrange their property settlement prior to the breakdown of their relationship, it is still possible for them to take steps to reach agreement on how to divide their property by agreement, but, as indicated above, by this stage it is often much more difficult to reach an agreement.
How is Property Protected?
Parties can arrange to protect the property of their relationship prior to or during their relationship by entering into a Binding Financial Agreement with their partner. Such an Agreement will usually set out the details of the assets, liabilities and financial resources which each party to the Agreement holds at the time that the Agreement is executed and the agreed amount attached to each of the assets, liabilities and financial resources. The Agreement will also usually set out details of which assets, liabilities and financial resources will be retained by each party. Finally, the Agreement will usually provide instructions as to what is to be done with any assets, liabilities and financial resources which the Agreement does not provide specific instructions regarding who is to retain them.
What Protections Can a Financial Agreement Provide?
- You can retain the property that you brought into the relationship;
- You can retain any property that you purchase during the relationship;
- You can avoid the debts your partner brings into the relationship;
- You can avoid debts your client takes on during the relationship;
- You can retain your superannuation interest you brought into the relationship;
- You can retain your superannuation interest you accumulated during the relationship;
- You can retain any inheritance you receive during the relationship.