De Facto Financial Agreements

With the statistics showing the number of marriages in decline it would be safe to assume relationships of a de facto nature are increasing.  The reason for this could be the subject of some debate but I believe the disputes between parties breaking up over who gets what property have had something to do with it.  Prior to 1 March 2009 the law in this regard was based on the Property (Relationships) Act, 1984 now it comes under the Family Law Act, just as it does for marriages.

With the laws changed some of the differences from the past between the rights of parties to an adjustment of property interests, particularly in the area of superannuation or future needs, post relationship, have changed so that the de facto regime now essentially mirrors that of a normal marriage.   In my view this makes De Facto Financial Agreements or Cohabitation Agreements even more important.  These agreements are essentially the same as a Pre-nup agreement for a married couple and are designed to allow couples to agree on how the property should be distributed in the event of a break down of the relationship, from the outset.

The Family Law Act makes provision for such agreements in Section 90 of Part VIIIA of the Act, which enables parties to contract out of the property and maintenance provisions of the Family Law Act.  This could be important to farmers or someone with a business or even the likelihood of a large inheritance, going into a new relationship and may give them the peace of mind of knowing how the property will be divided in advance or at least more control over the situation if things go wrong.

Section 90UB, 90UC and 90UD deal with the de facto provisions for such agreements and can take into account pre relationship property or financial resources allowing parties to put their own affairs in order, right from the start.  Agreements need to be carefully drafted to ensure compliance with the rules and to ensure they are binding.  The government is keen to see them work even making new laws in 2010 to deal with one court decision, which invalidated an agreement because it did not strictly comply with the original law.

Correctly prepared an agreement can exclude the Courts jurisdiction to deal with the property and although it is an area of much litigation even a faulty agreement can still be relevant in proceedings.  Independent legal advice is an essential element, required by both parties before they sign.  If you would like to know more give me a call.

This article was written by: Mark