The division of relationship property is regulated by the Property (Relationship) Act 1976 (“PRA”), the intention of which is to recognise fair division of the relationship property at the end of a relationship.
There is a presumption of equal 50/50 division, unless this can be disputed or there are certain mitigating factors. Factors such as the length of the relationship, any dependent children and economic advantage and disadvantage may be considered.
A relationship is defined as a marriage, civil union, or a de-facto relationship of three or more years, although shorter relationships may also apply.
In these relationships, there can be separate property and relationship property. Relationship property includes both assets and liabilities, and is property obtained throughout the relationship which is intended for the common use or benefit of the relationship. Separate property is property obtained outside of the relationship that is not for the common use and benefit of the relationship.
Any property which either party has introduced into the relationship can become relationship property. If a contribution has been made that increases the value of separate property, it may also become relationship property.
The following are some examples of separate property:
When a relationship ends, the distribution of relationship property can occur in three ways under the PRA: Mutual Agreement, Family Dispute Resolution; and Court Proceedings.
A prenuptial agreement (also known as a prenup, section 21 agreement, or a contracting out agreement) essentially outlines the process by which the parties have previously agreed to divide the property. The subject matter of these agreements includes the identification of separate and relationship property, the calculation of shares of the parties, and how the division would take place.
Certain requirements must be met for a contracting out agreement:
The Family Court has the discretion to set aside such an agreement if it would cause serious injustice.
Going to court for these matters can be costly and time consuming. The cost for filing an application for a relationship property order is $700. If the application proceeds to a hearing there is a $906 fee each half day the hearing takes, this is excluding solicitors’ fees. We recommend that if you are entering or in a relationship where there is an imbalance in assets (including forecasted future assets or earnings) that you contact us to discuss a prenuptial agreement. It may help to minimise disputes and costs arising when relationships and property need to be divided. Contact us for legal advice about the best option available.