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For love and finances: why every couple should consider a Relationship Agreement

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Many people enter de facto relationships later in life. In most cases, at this stage of life your family dynamics and financial circumstances are significantly more complex than what they were in your 20s or 30s. Communication is key to a healthy relationship and talking openly about your intent and wishes in relation to assets you are bringing into a relationship, and how you want to protect your children, can be worthwhile to document to ensure you reduce the risk of any disputes arising down the track. Attwood Marshall Lawyers Family Law Special Counsel, Michael Twohill, explains the benefits of a Relationship Agreement on Radio 4CRB.

Introduction

When you enter a relationship later in life you are a little more open minded to the fact that we do not have a crystal ball and don’t always know what the future will hold. After all, previous relationships may have failed for any number of reasons, none of which you planned for when you first entered those relationships. You live and you learn.

As you near retirement, you probably have adult children, more wealth to your name, or investments, and generally more to protect and to consider when moving on with a new partner.

One of the most important documents that is often underestimated and underutilized for couples that get together later in life is a Relationship Agreement.

What is a Relationship Agreement?

A Relationship Agreement is a document that gets drafted by a legal professional and signed by two consenting parties involved in an intimate relationship. It is a legally binding agreement under the Family Law Act. It is designed to assist couples in reaching an agreement about what is likely to happen in the event the relationship breaks down.

The time to enter into these types of agreements is at the start of the relationship when each person is keen to commit, when you are both able to acknowledge the assets that the other person has, and when you can have a mutual understanding of what the financial arrangements are going to be during the relationship and if something happens and the relationship comes to an end.

Although the most ideal time to enter a Relationship Agreement is at the start of your relationship that is not to say that you cannot execute this type of agreement well into a relationship. It is never too late to implement an agreement and get legal advice as to the best way to approach this.

A Relationship Agreement can provide:

  • Clarity: A couple can clearly set out their assets and detail what is to happen in the future if they chose to separate.
  • Assurance: The agreement is legally binding and will ensure that the Family Court cannot negate or change the agreement come the time it is referenced. This reduces the risk of any disputes arising in the future.
  • Peace of mind: A Relationship Agreement can provide peace of mind that your hard-earned assets that you have brought into a relationship are protected, including any assets you intend to pass onto your children.
  • Privacy: A Relationship Agreement is entered into only between the two parties involved in the relationship and their lawyers. This means that the agreement is private and no one else other than the couple need to be involved in it. This is a very different outcome when compared to court proceedings that may follow a property dispute if you do not have a Relationship Agreement in place and fight over assets when your relationship comes to an end.
  • Cost savings: When comparing what it costs to obtain legal advice and execute a Relationship Agreement, to engaging in dispute resolution strategies in the event a dispute over property and finances arises after separation, it is much more cost effective than battling out a dispute in court.


Too Taboo? Don’t be apprehensive to ask your partner to sign a Relationship Agreement

There is a common misconception that people may not appreciate being asked to sign a Relationship Agreement and that it means their partner does not trust them or does not expect the relationship to work out. It all comes down to how you approach the discussion.

There’s a couple of ways that you can approach the topic, and if done openly and honestly, the topic is likely to be embraced.

The skill is to bring the topic forward in a way that the person that you are entering into the relationship with doesn’t feel like there is an ulterior motive and feels that the reason you are entering the relationship is because you want it to last, whilst also considering the need to protect yourselves. It can also be a useful tool to use to outline what would happen in the event one party passes away. If one party does die, the agreement would then be binding on the air’s executors and administrators who would be administering their estate. For example, if something happens to one party, and the surviving partner is living in the house which is in the deceased’s name which was brought into the relationship, you can put something in place in a Relationship Agreement to make sure that your tenancy in that property is secured, at least for your lifetime or whatever is agreed to in the agreement.

A Relationship Agreement should never be entered into under coercion or duress. It needs to be approached in a respectful and collaborative way. It is there to protect both parties and be fair.

What can go wrong if you do not have a Relationship Agreement?

A lot can go wrong!

If you do not have a Relationship Agreement in place and your relationship breaks down, if the law identifies your relationship as a de facto relationship, your former partner will be eligible to apply to the court for an order on a property settlement or maintenance. This can be a very stressful, lengthy, and costly process.

There are also the disputes that can arise if you pass away. A de facto partner has the same rights as a married person. This includes rights and entitlements to the share of an estate or the right to challenge the Will if not adequately provided for. This may mean that assets you intend to leave to your children of a previous relationship may not end up where you had hoped.  

The process of executing a Relationship Agreement

Each party must obtain advice from their own independent lawyer about the agreement and ensure a solicitor’s certificate is attached to the agreement. Each party’s lawyer will explain the advantages and disadvantages of the agreement. This is what makes it legally binding. Drafting your own agreement without independent legal representatives will not give you a legally binding agreement.

When drafting the agreement, a family lawyer will need to apply the variables to each case to make sure that every aspect of the two parties involved in the relationship are dealt with, and that all the assets are dealt with, so that if something happens the wishes of the parties are followed, and it is all clearly outlined in the agreement.

In some cases, it is important to receive estate planning advice at the same time as entering into a Relationship Agreement as your Will should align with your intentions outlined in your Relationship Agreement.

At Attwood Marshall Lawyers, we are proud to have specialty departments that can cover both family law and estate planning areas so that our clients get the best advice to cover all their bases.

Once we are contacted to discuss the matter, we will meet with our client to discuss the contents of the agreement and their wishes.

We will give our advice and prepare all the documentation ready to write a letter to the other party, or the other party’s lawyer, with the draft of the agreement.

The other party will receive advice from their lawyer, they may negotiation alternations to the agreement, and once all parties are happy with the contents, both parties will sign.

The process is quite simple and can be completed respectfully and relatively quickly without fuss.

Attwood Marshall Lawyers – helping you protect your assets and your family

You have worked hard for your money and it is important to protect your assets, and any children you have to previous relationships, when you enter into a new relationship later in life.

It is always best to seek advice from an experienced family lawyer to discuss your unique circumstances and why you’re considering entering into a Relationship Agreement.

It is our intent to help families maintain positive relationships and provide exceptional client service and legal expertise.

To discuss our family law services or to find out more about the different types of agreements you can put in place, contact Family Law Department Manager Donna Tolley on direct line 07 5506 8241, email dtolley@attwoodmarshall.com.au or call our 24/7 phone line on 1800 621 071. You can visit any of our family lawyers at our conveniently located offices at Robina Town Centre, Coolangatta, Kingscliff, Brisbane, Sydney and Melbourne.

Read more:

Prenuptial Agreements, Relationship Agreements, Financial Agreements – what’s the difference, and do we need one?

Divorce later in life: 3 common reasons why relationships can break down in your twilight years

 
 

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