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How does relationship property work?
The Relationship Property Act (1976) dictates how the property of couples who are married, in a civil union or de facto relationship is to be divided if they separate
The purpose of the Act is to acknowledge both partners’ contributions to the relationship and fairly divide property between both parties.
What is included as relationship property?
Although exceptions may occur, the assets listed below are usually considered relationship property and must be divided between the two parties:
- Property – Any property bought during the relationship should be divided between the two parties.
- Family businesses – If a family business is used to provide income for the family, its ownership may need to be divided. This will often include business assets such as property, investments, and equipment.
- Investments – Investments that are made by either party during the relationship are usually considered relationship property. This includes any profit generated by these investments.
- Debt – Debt is split into two categories – relationship debt and personal debt. Relationship debt is split between the two parties whereas personal debt remains the responsibility of its associated person. Examples of relationship debt include:
- Mortgages on property.
- Debts associated with a couple’s children.
- Loans that work taken out as a couple.
- Loans that were taken out to benefit both parties.
What isn’t included in relationship property? (Separate property)
- Inheritance and gifts– Any property or assets that are inherited from a relative or friend or given to a party as a gift are not included in relationship property. This means that they do not need to be divided.
- Property and assets acquired while not in a relationship – Any property or assets which are purchased while a party is not in a relationship will remain theirs.
- Income from a separate property – If a party sells a property which is not considered relationship property, the proceeds will remain theirs.
When does separate property become relationship property?
Separate property may become relationship property if the non-owning partner helps to increase the value of the separate property.
For example, if a farm is considered separate property and the non-owning partner purchases equipment or stock to improve the farm’s value, they will be entitled to a share of the increase in value. The amount they are entitled to will depend on their contribution.
When separate property becomes mixed with relationship property or used for the benefit of both partners, it may become relationship property. This means that is will need to be shared between both parties regardless of whether it was inherited or a gift.
When is a relationship property investigation necessary?
When a marriage, civil union or de facto relationship comes to an end, it is important that the people involved are able to fairly divide their property with as little hassle as possible.
Unfortunately, the Relationship Property Act is often difficult to follow. Since every case is different, different rules will apply relating to the division of property and assets.
A relationship property investigation determines who is entitled to what according to the rules of the Relationship Property Act. This eliminates stress and allows both parties to know their rights and entitlements.
For relationship property investigations, services and advice, book an appointment with us today. Click below to send us a message and or give us a call on (09) 957 8675