The presumption of equal sharing
Dealing with the breakdown of a relationship is rarely easy, and feelings can quickly escalate when the parties can’t agree as to what should be divided pursuant to the equal sharing presumption of the Property (Relationships) Act 1976 (the “Act”).
The Act provides for the division of relationship property when a couple who is married, in a civil union partnership or de facto/same sex relationship separates, as well as where relationships end by the death of a spouse or partner.
The presumption under the Act is that, where the duration of the marriage, civil union partnership or de facto/same sex relationship lasted three years or more, all relationship property will be divided equally between the parties. The Court has jurisdiction to depart from this rule where it considers there are extraordinary circumstances which would make the application of the equal sharing presumption repugnant to justice. In the absence of exceptions, a relationship of less than three years (defined as a relationship of short duration) is not privy to this presumption and property will be divided according to the contributions made by each party.
But what is “relationship property”? Section 8 of the Act defines relationship property as:
- The family home. The family home is where the parties lived together as the principal residence.
- The family chattels, such as furniture, appliances, ornaments, tools, garden equipment and pets. It also includes motor vehicles, caravans, trailers and boats, together with any accessories, used wholly or principally for family purposes.
- Property owned jointly or in common in equal shares by the parties.
- Property owned immediately before the commencement of the relationship if the property was purchased in contemplation of the relationship and intended for the common use or benefit of the parties.
- Property acquired during the relationship.
- The proportion of any life insurance policy attributable to the relationship.
- Any insurance policy over relationship property.
- The proportion of any superannuation scheme entitlement attributable to the relationship.
- Any property on which the parties agree is relationship property.
- Income earned during the relationship.
- Any increase in value, income, gains or proceeds of sale from the items above.
- Debt incurred jointly by the parties or by one party for the benefit of the relationship or the relationship property.
- Gifts or inheritances intermingled with other relationship property.
Where relationship property has been transferred to a third person or into a trust, it is possible that the spouse from which the benefit was deprived could be entitled to compensation.
Separate property is defined in section 9 of the Act as being all property of either party that is not relationship property. Separate property is not subject to the Act’s presumption of equal sharing.
If parties to a relationship wish to choose their own rules as to what will be defined as relationship property and separate property, they can enter into a Contracting Out or Pre-Nuptial Agreement pursuant to Part 6 of the Act. This allows for property that would otherwise be defined under the Act as relationship property to be treated as separate property when the relationship ends.
Sarah Hagenson, Relationship Property Lawyer
If you would like to learn more about how you can protect your property at the beginning of or during a relationship through a Contracting Out Agreement then please contact the family law team at Franklin Law.