Whilst no couple intends to separate, unfortunately sometimes it happens. Deciding how to divide your assets when you separate or when a partner passes away can be a dreaded task, especially in modern blended families. However, it is one that can be made a lot easier. You may have heard of a ‘pre-nup’ or ‘prenuptial agreement’, well this is effectively what you need. A Relationship Property section 21 Agreement, or a contracting out agreement as it’s more commonly known, sets out how your property will be distributed should you and your partner decided to end your relationship.
The first question everyone asks is ‘but do I need one?’ There is a common misconception that these types of agreements are only for couples intending to wed, this could not be further from the truth. Our law regarding equal division of assets also applies to de-facto relationships or if you have a child with your partner. If you think that anything other than a 50/50 division is fair, then a contracting out agreement is a must for you. If your relationship ends you may feel the desire for an unequal split due to one person making greater financial contributions than the other or wanting to retain property separately that was existing prior to the relationship. Relationship property is effectively anything acquired during the relationship for the common benefit of you both. This includes, but is not limited to, vehicles, furniture, houses, and superannuation contributions. Separate property is property that is owned prior to the start of a relationship, and while that may start off straightforward, it can quickly intermingle and become relationship property, which may cause tension if a separation were to occur later down the track.
We know that this can be a very awkward conversation to raise with your partner and sometimes partners will respond with ‘do you think we’re going to break up?’ Calmly explain your reasons and the fact you want to protect their assets as much as your own. A contracting out agreement is much easier to sort out at the beginning of a relationship and is a very small investment in protecting your future should the unthinkable happen. It is important to remember that things can change, it is all part of life.
Contact us for some independent advice and we can help you and your partner understand the process and protect both your futures if the unthinkable were to happen - but before you phone us, make sure you have Valentine's Day sorted, everyone needs flowers or chocolates once a year!