Relationship Breakdown And The Equal Division Of Assets

The Property (Relationships) Act 1976 (‘PRA’) makes the assumption that all relationship property will be divided equally on the breakdown of any relationship (whether you are married, in a de facto relationship or a civil union) that has lasted for 3 years or more. If you are in, or about to enter into, a relationship and you have significant assets that you wish to clearly protect as separate property in the event that the relationship breaks down, then you will need to enter into a Property (Relationships) Act Contracting Out Agreement (‘Contracting Out Agreement’).

The sorts of assets that you should consider protecting include:

• An existing business that you own.
• Significant inheritances that you expect to receive in the future.
• Significant cash assets that you bring to the relationship.
• An existing house that you own.

The PRA has strict requirements in respect of Contracting Out Agreements and, if these are not met, then the agreement will be deemed invalid and unenforceable. In particular:

• A Contracting Out Agreement must be in writing and signed by both parties.
• Each party must be properly advised independently by a lawyer as to the nature & effect of the agreement before they enter into it.
• Each signature must be witnessed by the lawyer advising them.
• The lawyer advising each party must certify on the agreement that they have given the necessary independent legal advice.