As most people are aware, the Property Relationships Act 1976 dictates that all assets and liabilities of a relationship are to be divided 50/50 when a couple separates. The same Act does however provide that couples are able to contract out of this equal sharing rule.
Blended families are becoming more and more common and it’s no longer the norm for a couple to be together forever. With this in mind; sharing all your assets with a few different people can become concerning, including that house that you used to own solely.
A Contracting Out Agreement defines how assets and liabilities will be allocated in the event that the couple separates, or one dies. By signing a contracting out agreement, a couple is able to come to any agreement that they like rather than being stuck with the 50/50 sharing as prescribed by law.
The common misconception here is that that’s all that needs to be done. However, the underlying feature of the Act even when you are contracting out is that the terms reached and agreed must be fair in the particular circumstances of the parties. This is often where we will step in. We can provide independent legal advice for one of the parties – for you – so that you can be assured that the effects and implications of the agreement you are signing are exactly what you thought.
Whilst the agreement may have been fair at the time of signing, it is important that the agreement remains fair throughout its life. As previously mentioned, the document is a live document and needs to be reviewed regularly. This means that it is similar to a Will in that every few years, or upon a significant change of circumstances (such as having a child, a serious illness, becoming unemployed, or getting married), this agreement should be reviewed to ensure it is still enforceable.
If the Contracting Out Agreement is not regularly reviewed it becomes vulnerable to challenges – and this is where the holes start to appear. The important note is that as a relationship continues to grow and change, the agreement which governs the property of that relationship must grow and change with the circumstances. Get in contact with us today to review your agreement, or to discuss creating an agreement for you and your partner.