Protecting Your Property in a Relationship

Joining your life with that of a long-term partner is one of the most important steps you can take. But although it’s uncomfortable to consider and often awkward to discuss, it can be equally important to ensure that your and your family’s interests are protected in the event of separation or death.

Getting a ‘Contracting Out Agreement’ can be crucial in enabling you to pursue your partnership with certainty and confidence about your future.

A Contracting Out Agreement, commonly referred to as a ‘pre-nuptial agreement’, can provide a safety net in case of separation or death between you and your spouse. Under the Property (Relations) Act 1976, if you have been in a qualifying relationship (de facto, marriage or civil union) for three years or more, all ‘relationship property’ should be divided equally between the parties in the event of a separation. A Contracting Out Agreement allows you and your partner to literally contract out of the relationship property laws by making your own agreement about what is to happen to your respective property in the event of the relationship’s dissolution.

These agreements specify what property is considered as relationship property and what is separate property, and how the division of property would happen in case of separation or death.

Contracting Out Agreements can be used to protect your own assets, such as a home or a business, when you enter into a relationship. It can also protect any contribution you make towards a joint purchase e.g. a home. A Contracting Out Agreement can set out each parties’ contribution to a joint asset as ‘separate property’ that each is entitled to get back, as well as how any balance of funds is to be divided e.g. proportionately according to each contribution, or equally.

Other reasons to consider a Contracting Out Agreement include if you have made a significant contribution to your partner’s assets, have received an inheritance or gift, or have children from previous relationships and you want to ensure they will be provided for in the event of your death.

You can enter into a Contracting Out Agreement at any time, but it is advisable to do so before the relationship property laws apply. Additionally, it is crucial to review the agreement every 3-5 years or when significant changes occur in your or your partner’s financial or non-financial circumstances.

To ensure that your Contracting Out Agreement is legally binding and protects your interests, it is essential to seek independent legal advice from a family law expert. At Freebairn and Hehir law we can offer a personalised service to guide you through the whole process and provide certainty for the future of your property.