With the Law Commission’s recent reviews of both the Property (Relationships) Act 1976 and succession law, Contracting Out Agreements (also known as pre-nuptial agreements) are a hot topic.
While the Law Commission has recommended significant changes to relationship property and succession law, any changes to the law are still a long way off. In the meantime, the current law continues to apply both on separation and death.
The Property Relationships Act applies to de facto relationships of more than three years as well as marriages and civil unions and sets out a presumption that relationship property is to be divided equally following the end of a relationship.
What is relationship property?
Relationship Property includes the family home no matter when or how it was acquired, chattels including vehicles and income. Pre-relationship assets can also be included depending on the circumstances. Without a Contracting Out Agreement, trust property may also be at risk.
While they may seem rather unromantic, Contracting Out Agreements are necessary to ensure your property interests and any wealth you bring into your relationship are protected if everything later turns pear shaped or if you or your partner dies. A Contracting Out Agreement (so named because they contract out of the provisions in the Property Relationships Act), provides certainty about the status and ownership of property in the event a relationship ends.
They allow you and your partner to agree in advance on how your property should be dealt with in the event your relationship doesn’t last the distance or if one of you passes away. That can save a lot of time, money and stress down the track.
Is there a time limit for entering a Contracting Out Agreement?
You can enter into a Contracting Out Agreement at any time and the agreement can protect as much or as little property as you wish. A Contracting Out Agreement ensures that there are no nasty surprises if the relationship does come to an end and gives you confidence that your assets and wealth are protected from an ex-partner.
It’s important to obtain good advice early on (or even before) a relationship so that your assets are protected. One size does not fit all, and agreements need to be tailored carefully to reflect your circumstances, your goals and your relationship. The Property Relationships Act sets out strict requirements for Contracting Out Agreements and it will be necessary for you and your partner to receive independent legal advice in respect of any agreement to ensure it is enforceable.
Don’t wait for the law to change, for certainty you need to contract out of the current law. If you think that you might need a Contracting Out Agreement or wish to discuss further, contact Associate Anna Venz, or a member of the Famliy & Relationship Law team.
Disclaimer: The content of this article is general in nature and not intended as a substitute for specific professional advice on any matter and should not be relied upon for that purpose.