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Separation and Dissolution of Marriage
In
2002, the Matrimonial Property Act 1976 was renamed the
Property (Relationships) Act 1976
(“the Act”). The Act now applies to de facto heterosexual
couples, same sex couples, married couples and couples in Civil Unions.
It also applies to relationships that have ended by the death of a
spouse or partner.
The
law has made changes to relationship property and maintenance law to
address the differences in economic position between spouses or partners
that result from the division of functions during the relationship.
The
Act provides legal rules on how property should be divided when a
marriage, civil union or de facto relationship ends. These rules are
based on some of the following general principles:
1. Men
and women have equal status, and their equality should be maintained and
enhanced;
2.
Non-financial contributions, such as caring for children and running the
home, are equal in value to financial contributions;
3. Each
spouse or partner has made an equal contribution to the relationship and
therefore relationship property should be shared equally between them;
4.
Whether
one spouse or partner may be more responsible than the other for the
break-up of the relationship is not relevant to the division of the
property. Although in exceptional circumstances the Court may take the
spouse or partner’s conduct into account in deciding how the division of
property will be carried out;
5.
A just
division of relationship property takes account of the economic
advantages or disadvantages to the spouses or de facto partners arising
from their marriage or de facto relationship or from the ending of their
marriage, civil union, or de facto relationship;
6. Questions
arising about relationship property should be resolved as inexpensively,
simply, and speedily as is consistent with justice.
What
is a De Facto Relationship?
A
de facto relationship is a
relationship between two people (whether heterosexual or same sex) who
are both over 18 and who live together as a couple, but who are not
married to one another.
In
deciding whether two people live together as a couple, the Court will
consider the following factors:
-
How long the
relationship has lasted;
-
The extent to which
the couple share a home;
-
Whether they have a
sexual relationship;
-
Their financial and
property arrangements and interdependence;
-
Their ownership,
use and acquisition of property;
-
Their degree of
mutual commitment to a shared life;
-
Their care and
support of children;
-
Who does the
housework and other household duties;
-
The reputation and
public aspects of the relationship (eg whether the partners are known
to family and friends as "a couple").
These
factors are used as a guide. The presence or absence of any one of them
will not necessarily determine whether there is a de facto
relationship. The Court decides how important any one given factor is
in each particular case.
How long must you have been living together to be covered by the Law?
The
Act only covers de facto couples that have lived together in a de facto
relationship for at least three years. If your relationship has lasted
for less than three years, you may still be covered by the Act if there
is a child, or if you have made a substantial contribution to the de
facto relationship. Married couples and civil union relationships are
covered by the Act from the date of their marriage. If a marriage or
civil union has lasted less than three years different rules apply to
the division of property. If a married couple or civil union partners
lived together in a de facto relationship before they married or were
civil unioned, then the period of the de facto relationship will be
treated as if it were part of the marriage or civil union.
What is
relationship property?
Relationship property includes the following:
-
The family home;
-
Family chattels,
such as household furniture and the family car (it does not include
heirlooms or taonga);
-
Any property
acquired when contemplating the relationship;
-
Debts;
-
Insurance on the
spouses or partners' lives or on the family property;
-
Any part of a
superannuation scheme or policy attributable to the marriage or
relationship;
-
Gifts or
inheritances which the owning partner allows to become mixed with
other relationship property;
-
Property owned
jointly or in equal shares by the spouses or partners;
-
Property acquired
by either spouse or partner during the relationship;
-
Salary or wages
which comes in during the relationship;
-
Property acquired
by one spouse or partner before the marriage in contemplation of the
relationship and intended for the common use or benefit of both
spouses or partners;
-
Property which both
spouses or partners agree is relationship property;
-
Increases in the
value of relationship property, income from it or the proceeds from
sale of it.
All
or some of a spouse or partner’s separate property may become
relationship property if:
-
That spouse or
partner puts the separate property into relationship property, eg by
using separate property to buy or upgrade relationship property;
-
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 the
separate property;
-
The separate
property was obtained while the spouses or partners were living apart
and the Court thinks it is fair to treat it as relationship property.
What is
separate property?
Separate property will stay separate if it is kept separate during the
marriage or civil union. Generally separate property is not shared, it
remains the property of the spouse or partner who owns it. To protect
this property, you should make a separate property agreement with your
spouse or partner. Separate property is anything that is not
relationship property. Most property which a spouse or partner owns
before a relationship will be separate property. All property acquired
out of separate property and proceeds from the sale of any separate
property are also separate property. Any increase in the value of
separate property remains separate property. The increase in the value
of separate property becomes relationship property if the increase is
caused by the actions of the other spouse or partner or by the use of
relationship property. Gifts and inherited property which a spouse or
partner receives during a relationship will be separate property, unless
they become mixed with relationship property. The family home (even if
it is in the name of one spouse or partner) and family chattels are
never separate property.
How is
Relationship Property divided when a couple separate?
If
the relationship has lasted more than three years, all relationship
property will be divided equally unless the Court considers there are
extraordinary circumstances that will make equal sharing repugnant to
justice. Property that is being shared is normally valued at the date
of the Court hearing. However, the Court has the power to have property
valued at a different date if it thinks this is appropriate.
If a
marriage or civil union has lasted less than three years, the division
of the family home and chattels will be shared according to the
contributions of each spouse to the marriage or civil union if:
-
They were owned by
one spouse before the marriage or civil union began;
-
They were received
by one spouse as a gift or under a will during the marriage or civil
union;
-
One spouse made a
disproportionately greater contribution to the marriage or civil
union.
For other relationship property (including businesses) the Court begins
with the general principle that the husband and wife have contributed
equally and that they should share in that property equally.
If the Court considers that one spouse has made a clearly greater
contribution to the marriage or civil union, then the relationship
property will be divided according to the contributions of each spouse.
Most de facto couples that have lived together in a de facto
relationship for less than three years will not be covered by the Act.
However, if your relationship has lasted for less than three years, you
may still be covered by the Act if there is a child or if you have made
a substantial contribution to the de facto relationship. If the Court
is satisfied that failure to make an order would result in serious
injustice, it can make an order requiring that relationship property be
shared according to the contribution each partner made to the
relationship.
Are there any Exceptions to Equal Sharing of Relationship Property?
Generally, all relationship property will be divided equally unless the
Court considers there are extraordinary circumstances that will make
equal sharing repugnant to justice. The court has authority to make
orders to address economic disparities between the spouses or partners
when the marriage, civil union or relationship ends.
If
the income and living standards of one spouse or partner are likely to
be significantly higher after the relationship ends than those of the
other spouse or partner, the Court can award a lump-sum payment from
that spouse or partner's share of the relationship property to the other
spouse or partner.
Where
one spouse or partner has spent time and effort building up the value of
his or her separate property during the relationship, the Court can
order that the other spouse or partner be compensated for the increase
in value of that separate property. The Court can only make such an
award if the incomes and living standards of the spouses or partners are
likely to be significantly different because of the division of
functions during the marriage civil union or relationship.
In
deciding whether to make an order the Court can consider the likely
earning capacity of each spouse or partner and their responsibilities
for the daily care of their minor or dependent children and any other
relevant circumstances.
The
court has flexibility to award maintenance to be paid to a spouse or
partner. This is to help address the economic consequences of a
relationship ending.
Who pays
the Debts?
Personal debts are the responsibility of the spouse or partner who
incurred them and non-personal debts are the responsibility of both
spouses or partners.
What
is left after joint debts are paid is the relationship property that is
shared between spouses or partners. A spouse or partner cannot use all
the relationship property to pay off personal debts. The other spouse or
partner has a protected interest of up to a specified amount of the
family home.
Can
we Contract Out of the Act?
Yes,
if you and your spouse or partner do not want the Act to apply to your
relationship, you can enter into an agreement to contract out of the
provisions of the Act.
You
can make your own agreement about how you will own the property, how you
will manage it during your relationship, and how you will divide it if
your relationship ends.
The
agreement must:
-
Be in writing and
signed by both parties;
-
Each party must
have independent legal advice before signing the agreement;
-
The signature of
each party must be witnessed by a lawyer, who must certify that he or
she has explained to that party the effect and implications of the
agreement.
Can a
Contracting Out Agreement be overturned?
It is very
difficult to overturn a Contracting Out agreement that is made in
accordance with the requirements of the Act. The only grounds, which a
Court can overturn, an agreement is if it is satisfied that giving
effect to the agreement would cause serious injustice.
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