Contracting Out Agreements
If you’ve been in a relationship with your partner for three years, all property classified as ‘relationship property’ is to be divided equally between the two of you, unless you have a Contracting Out Agreement in place?
What is a Contracting Out Agreement?
A Contracting Out Agreement, commonly referred to as a ‘prenup’ allows couples to contract out of the Property (Relationships) Act 1976 and allow them to decide how relationship property will be split in the event of death or separation. This agreement must be recorded in writing and a lawyer must witness your signature and certify they have explained the effects and implications.
What assets can be classified as relationship property?
A common misconception is that all assets acquired prior to commencement of a relationship will remain their separate property. This is not always the case as there are many instances where ‘separate’ property becomes intermingled with relationship property. Relationship Property will usually include, but not limited to:
The family home;
Furniture and Chattels
Vehicles
Income/Business
Bank Accounts in either parties joint or separate names
Contribution to superannuation or insurance policies.
In summary, even if one party has separate assets prior to the relationship commencing, if they have been mixed with relationship property it is likely that it will be classified as relationship property.
Why do couples enter into a Contracting Out Agreement?
Some common scenarios where couples enter into a Contracting Out Agreement include:
Couples wish to classify their assets and debt on their own terms;
One couple has significant assets/inheritance they wish to protect.
Couples have a blended family and wish to provide for their children from previous relationships.
Protect themselves from each other’s debt
We want to ensure our clients affairs are in order. If you would like to discuss this further, you can contact us or make an appointment to see us in our Botany or Beachlands Office.