If one or both of you already have property, handling things correctly at the start of a relationship can help you avoid your assets becoming a point of contention later. Some common options that couples agree upon with regards to property owned prior to the relationship include:
If one person owns property prior to the union
- Will you both live in the property?
- What if it is currently rented to a third-party? You could choose to live together in another property (rented or purchased together)
- Will the property remain in the name of the partner it belongs to?
If both parties independently own property
- Will you both live in one and share the income from the other (an investment) property?
- Will you both turn your properties into investments and rent/buy another property together to live in?
- Will you turn both of your properties into investments and purchase a new property together?
- Will you sell both?
It is important to know that the home that you choose to live in becomes the marital home and becomes an asset of the union. So, if you or your partner has property, it is recommended that you consult your professional team for advice in areas such as Estate Planning, including Wills.
Financial agreements and why it is a good idea to have one.
Binding Financial Agreements (BFAs), sometimes called a prenuptial agreement, are becoming widely accepted, especially when one person in the relationship has more financial resources than the other, or when both people come into the relationship with assets that they choose to retain as their own.
You can set up a written agreement any time before or during a relationship. It will outline the division of assets, and how these will be managed. Each of you will need to receive independent legal advice and there are some formal requirements to ensure the agreement is as binding as possible. The agreement will need to be lodged with the Court. It’s important that financial agreements are reviewed regularly and updated to accommodate changes such as life events, having children, and acquisition or disposal of new assets.
Couples should consider seeking appropriate legal and accounting advice about whether a financial agreement is right for you and your circumstances. It’s not unheard of for a Court to declare an agreement invalid and set it aside. To get more information on this have a look at Section 90K (married couples) and Section 90UM (de facto couples) of the Family Law Act 1975.