In a relationship longer than 3 years, the Property (Relationships) Act 1976 provides that relationship property will be shared equally, unless a Court considers there are extraordinary circumstances which would make equal sharing repugnant to justice.
A Contracting Out Agreement is a private agreement to determine the status, ownership and division of their property upon separation or death. Parties should enter into a contracting out agreement before the relationship has lasted three years. A contracting out agreement may provide for the following:
It describes the (relationship) property each party is entitled to on separation or death, which provides security;
One party can protect significant assets as his/ her separate property;
Provision can be made for children from a prior relationship; and
The agreement can provide protection from the other party’s debt.
Each party’s assets and liabilities will be covered by the agreement, which needs to be fair. If an agreement is exceedingly one-sided it could be set aside by a Court.
A contracting out agreement should be reviewed when the parties’ circumstances change, for example, if the couple has a child, or new assets are acquired. It is essential the agreement is reviewed as the longer the relationship stands and the circumstances of the parties change, the more likely the agreement will be set aside, as to uphold it would be unjust.