Relationship property is an area that involves no hard-and-fast rules, but one which is continually evolving to meet the changes within society. In a nut shell, it involves the rights of parties in respect of assets of those in a marriage or de facto relationship.
De Facto Status
If the relationship you are in is deemed to be a “De Facto Relationship”, then basically the rules surrounding relationship property will apply as if you were married. A de facto Relationship exists where 2 adults live together as a couple but are not married.
In determining whether 2 people live together as a couple, all the circumstances of the relationship are taken into account. The main factors looked at include:
- the duration of the relationship
- the nature and extent of common residence
- whether or not a sexual relationship exists
- the degree of financial dependence or interdependence, and any arrangements for financial support, between the parties
- the ownership, use, and acquisition of property
- the degree of mutual commitment to a shared life
- the care and support of children
- the performance of household duties
- the reputation and public aspects of the relationship
This is the property that must be divided between the parties if their relationship ends. An agreement can be put in place to detail what is and isn’t to be considered relationship property, so that items are protected if your relationship was ever to end.
Relationship property will usually include:
- the family home and chattels (e.g. household furniture, the family car)
- any property acquired by either partner before the relationship, intended for the common use or benefit of both partners
- property owned jointly or in equal shares by the spouses or partners
- property acquired by either spouse or partner during the relationship (except for gifts and inheritances)
- income earned during the relationship
- joint debts
- insurance on the spouses’/partners’ relationship property
- superannuation or insurance on the spouses’/partners’ lives, which has built up during the relationship
- gifts or inheritances which the owning partner allows to become mixed with other relationship property, for example inheritance money is used to buy a computer for household use
- property which both spouses or partners agree is relationship property
- increases in the value of relationship property, income from it, or money from the sale of it
Separate property is all property that is not relationship property, and stays with the person who owns it. Separate property will remain so if it is kept separate from the relationship during the marriage, civil union, or de facto relationship.
Separate property includes:
- any property acquired by either spouse or partner while they are not living together as a couple
- income that is acquired from separate property e.g. proceeds from the sale of any separate property
- any increase in the value of separate property, unless it is caused (directly or indirectly) by the actions of the other spouse or partner or by the use of relationship property
- family heirlooms
- gifts and inherited property which a spouse or partner receives during a relationship, unless they’re mixed with relationship property (e.g. you used your inheritance to pay off the mortgage on the family home).
The separate property of one spouse or partner may become relationship property if it gets mixed with relationship property or used for relationship purposes, for example if:
- they put the separate property into relationship property, e.g. putting an inheritance into a joint bank account
- the other spouse or partner’s actions have helped to increase the value or income from the separate property
- relationship property has been used to bring about growth in, or income from separate property, for example if relationship money is used to refurbish a rental flat inherited by one of the partners then the flat may be regarded as relationship property
- the separate property was obtained while the partners were living apart and the Court thinks it’s fair to treat it as relationship property
In lieu of having a formal agreement, the main thing to be conscious of is to avoid ‘mingling’ of your separate assets with relationship assets as described above.
You should be aware that no matter how careful you are, without the protection of a formal agreement as to the division of your assets you will be more exposed to claims against property you may consider separate if your relationship was deemed to be one of de facto status or you are legally married.
As mentioned above, the area of relationship property can be a mine-field at times. Contact us if you need some guidance in this area.