Cohabitation agreements can save you and your assets in the event of a break-up with your partner. Yes, some partners rely on the trust and honesty built on their relationships. They will trust that, after their relationship breaks, their partners will give them their properties or anything they deserve to have. Despite this ideal outcome, some partners are afraid that things might go south during breakups.
Cohabitation agreements are for unmarried couples who want to live together. Couples who are in a de facto relationship (not married to each other) and are living on a genuine domestic basis or planning to live together may consider creating a cohabitation agreement. Cohabitation can occur between opposite-sex couples and same-sex couples.
What is a Cohabitation Agreement?
Cohabitation is the state of living together and having a sexual relationship without being married. De facto couples who live together generally cohabitate. Married couples can't use a cohabitation agreement since they are married.
A cohabitation agreement is a legal document between cohabiting partners that specifies what will happen to various assets in the case of a future separation. As we mentioned, some partners rely on their partner's honesty and trust after a relationship breakdown. But other couples still want a cohabitation agreement to save their assets and properties
This is a type of Binding Financial Agreement (BFA) regulated under Section 90UB and 90UC of theFamily Law Act 1975. This binding financial agreement formalises how assets, property settlement will take place in the event of separation. Additionally, these financial agreements allow you and your partner to agree on:
- Shared responsibilities
- The property and debts each person has when you start living together
- How the couple will divide their property in the event of a separation
- The terms of repayment for shared debts in the event of a separation
While an Agreement is not legally mandatory, the existence of one ensures that you get a say over what happens in case of separation. It also protects both cohabiting partners and minimises conflict after separation.
Wait, Cohabitation Agreements Are Legal, Right?
While cohabitation agreements can protect your assets after a breakup, some couples may wonder if they're legal. If something is legal, it can give you more protection, right? Yes, cohabitation agreements are legally binding! However, the agreement must comply with the requirements in the Family Law Act 1975. The Family Law Act (1975) governs the rights of cohabiting couples in Australia.
Under Section 90G of theFamily Law Act 1975, a cohabitation agreement (or a BFA) will be legally binding if:
- All parties signed the agreement
- Before signing the agreement, each party received independent legal advice regarding their rights and the advantages and disadvantages of making the agreement.
- Before or after signing the agreement, each party was provided with a signed statement by a legal practitioner confirming that the advice was provided.
- A signed copy of the legal practitioner's statements is exchanged between the parties.
- The court did not set aside or terminate the agreement.
Does your cohabitation agreement meet all the requirements above? If so, you can rest easy with your assets and property. Now, with this information in mind, you should know what to put in your cohabitation agreement.
What to Include in Cohabitation Agreements
1. Details of You and Your Partner
State if you and your partner already live together. If you do, include the shared property's address and when you moved in. Include the names and genders of you and your partner, and which state or territory you'll be living in.
2. Household Expenses and How They Will Be Split
Outline household expenses and how they will be split. Household expenses can include rent, electric bills, internet bills, TV cable, groceries, and other utilities. Some couples decide to go for a 50-50 split or assign specific expenses to each other. Other times, a partner pays for more.
3. List Separate and Shared Assets or Debts
- Separate assets or debts. Separate assets or debt are owned by only one partner in a cohabiting relationship. The owner retains sole control and responsibility in the event of a separation.
- Shared assets or debts. Shared assets or debts are items, property, bank accounts, or loans that partners co-own or share responsibility for. In the event of a separation, you can choose how to divide the assets or debts.
De facto couples must demonstrate their connection to file a claim for property settlement. This will include evidence of the relationship, like the length of the relationship, photos and videos, and statements from family or friends.
4. Children
Cohabitation agreements should state whether there are children (either biological or adopted), especially when they are still dependent on the parents. Courts will make sure that both parents follow the child's best interests. Separation will naturally boil down to custody battles or disputes regarding parenting arrangements.
You should also state whether there are children both of you share, or any children from a previous relationship or relationship.
5. Maintenance Payments in Case of Separation
One partner may not be able to support themselves and the children after a separation. Maintenance is financial support from one spouse to the other if one partner cannot meet their reasonable expenses after their cohabitation or de facto relationship has come to an end.
Partners can agree that one will pay for maintenance for the other. If both cannot agree on maintenance payments, the party concerned can file for financial support with the Court. However, this party must show evidence that they could not adequately support themselves and that the other is financially capable of supporting them.
Notarisation of Cohabitation Agreements
A notary public is not necessary for the agreement to be legally binding. However, having witnesses (most preferably lawyers) present during the signing is highly recommended to ensure the agreement's validity.
Cohabitation versus Marriage
It's important to understand the differences between cohabitation (de facto relationships) and marriages because Cohabitation Agreements only apply to cohabiting partners.
Although cohabitation and marriage have similarities in that they both deal with topics like debt responsibilities, division of assets, support payments, and information regarding children, there are significant distinctions between the two:
- As to the formal steps. A couple getting married needs to obtain a marriage license; cohabiting couples don't require any formal or legal steps to start cohabiting.
- As to ending the relationship. Ending a marriage in Australia requires the formal process of filing for divorce or annulment, as the case may be. Cohabiting couples who have registered their relationship have to revoke that registration, which can be an informal process, depending on the terms and conditions of your Cohabitation Agreement.
- As to the effects of death. If a spouse in a marriage dies without leaving a Will, the surviving spouse will usually inherit part of the estate. However, the surviving partner in a cohabitation relationship may not have an automatic right to any inheritance if there is no Will.
Why Do We Urge Couples To Get Cohabitation Agreements?
Cohabitation agreements are the best way to protect your assets and properties. However, only certain couples can successfully agree to this. We understand that the idea of opening up a cohabitation agreement can spark arguments and distrust with your partner.
However, we would like to state that cohabitation agreements will foster transparency and security. A partner who knows what they should rightfully own after a breakup is still a sign of unselfishness and honesty. So, why don't we help you uphold these traits with a binding financial agreement?
JB Solicitors can help you understand everything you need to know about cohabitation agreements and other binding financial agreements, and de facto rights in NSW. Our team of expert family lawyers can help with any concerns you have in entering into legal agreements with your cohabiting partner.
Do you need our help entering into a binding financial agreement with your partner? Contact us today.
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.
