Why Relationship Property Settlements Should be Formalised

Why Relationship Property Settlements Should be Formalised

Separating partners often reach an agreement between themselves about how to divide their relationship property and in many cases, never actually formalise their agreement. On occasion this approach is taken as it is perceived to be the lowest cost option at the time. This is often combined with a view that communication remains amicable enough that there is little or no risk of any future dispute arising between them. However, what people in these circumstances often overlook is the problems which can be created if one of them die, or if one gets a new partner in the future and the dynamic between them shifts as a result.

The recent decision of Radney & Radney [2022] is a timely reminder about the importance of formalising relationship property settlements, even in circumstances where assets have already been divided (and in some cases sold). That case involved a couple who separated back in 1985 after being married for 21 years. The wife continued living in the family homeand the husband moved out but they both remained in a joint tenancy on the title to the house. In other words, the survivor on the death of one of them would automatically receive the other half of the house. They finally got around to a divorce in 2000 and they then had 12 months in which either could have made an application to the court to formalise their agreement as of right, but neither did.

The husband subsequently re-partnered and in 2019 he arranged for the joint tenancy to be severed. This meant that each of he and his ex-wife now had a 50% interest in the family home which would pass to their respective estates on each of them dying. The wife than made an application in 2020 for a property settlement, some 19 years out of time following the expiry of the ordinary deadline 12 months after divorce. She sought the transfer of the family home into her sole name. This required the court to first grant her leave to make the application 19 years late. Before the question of whether that leave ought to be granted could be determined, the husband then died. Due to a technicality about the court not having anypower to be able to hear the application after the husband died, the wife’s application was dismissed.

The takeaway message ought to be that regardless of your views about your ability to ‘get along’ with your former spouse or partner, you ought to protect not just your interests, but those of your children or any other person who may ultimately stand to benefit from your estate many years down the track. Formalising the agreement dividing your relationship property is the necessary step to take to minimise the likelihood of a future dispute arising. The cost of doing so would ordinarily be a fraction of the cost of dealing with a scenario such as the case referred to above. To not formalise your relationship property agreement leaves vulnerable, and that vulnerability extends to others you care about as well. In these cases ‘she’ll be right’ may well not be.

Finally, if you have read this far and think that you need some practical advice or assistance in relation to your situation, then now is probably the time to get in touch. Austral Legal can help and we offer an initial discounted 30-minute SmartMove appointment for $80 by phone or in person at our office. Bookings can be made online through our website or simply by phoning our office on 08 9745 9550. Once we have a handle on what is required, we may well be able to offer a fixed fee for any further legal services, giving you cost certainty from the start. Austral Legal. Practical advice.