When considering whether a written agreement should be entered
into it is necessary to look at the Property (Relationships) Act
1976. This is the act which governs the rights and obligations of a
couple on the breakdown of a qualifying relationship.
Firstly applications to Court can be made up to a year after a
dissolution of a marriage or civil union. As a legal dissolution
cannot be applied for until two years after a separation that means
at least three years. If the relationship is a de facto
relationship then the application can be made up to three years
after separation. However that is not the end of the matter because
a Court can extend that time frame if they consider there has been
good reason for the delay.
Secondly the starting point is an equal division of relationship
property. The couple may feel comfortable that they have divided
all relationship property equally so the risk of issues arising
later is small. However they may have in fact excluded items that
are relationship property or included items that are separate
property without realising it. Without discussion with a lawyer
they may have inadvertently left open the potential for a
Thirdly while the starting point is equal division there are
some circumstances where there are compensatory payments available.
These may not have been thought about at all.
There is also the added complication that if no separation
agreement is signed and no dissolution applied for before one party
dies, the survivor could claim against their estate even though
there has been an informal division. This would cause unnecessary
stress for the grieving family.
The couple may feel that given they have completed an amicable
division of assets equally between them the risk is so small that
it is worth taking. This becomes a judgement call for them at that
stage. Without being sure the correct advice has been taken on both
sides there remains a risk for at least three years from separation
of a claim being made. Often this can happen when a new partner
arrives on the scene, or extended family or friends become involved
and suggest a better deal could have been obtained. Regardless of
the merits of that view, it involves unnecessary stress and cost
when it occurs.
For any agreement to be binding there are formalities that have
to be complied with. These are set out in the Act. Briefly,
The agreement must be in writing;
There must be advice from lawyers from independent firms;
There must be disclosure of assets; and
There must be an understanding of the agreement and what it
There must also be an absence of duress in entering into the
There are some situations where you cannot escape completing a
separation agreement and using independent lawyers. For instance if
there are financial arrangements which require bank funding such as
one party buying the other out of the family home. In that
situation the bank will not advance funds for that purpose unless a
properly executed separation agreement has been signed. Obviously
the bank is concerned that their security is safe from future
It is not enough for the parties to write their own agreement.
Nor is it possible to use the same lawyer, or even law firm. The
law is very clear that if there is to be full and final settlement
of relationship property matters there needs to be an agreement in
writing through independent lawyers that complies with the
formalities of the Property (Relationships) Act. You are free to
agree to something which departs from what the Act would say. So
long as the formalities of the Act are complied with the chance of
a later court intervening, without something more arising, are
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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To ensure that all possible problems are considered and addressed, the transactions must be appropriately documented.
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