Almost everyone envisions that when they get married, they will stay married forever. However, invariably in this day and age, separation and divorce is becoming more and more common. Further, some couples do not get around to getting married or aren’t even legally able to get married. Some have children from previous relationships or marriages before separating and beginning a new partnership. These trends are now entrenched in today’s society and people are now living longer than ever.
The typical partnership may begin when both parties are relatively young with neither party having accumulated any assets of significance. In the event of a relationship breakdown where both parties cannot amicably agree on a financial settlement, the Court will adopt a four step process in determining a financial settlement which is set out in the Family Law Act to assess and ultimately decide upon the terms of settlement. We will explore this four step process in the near future but with respect to the commencement of a relationship or the contemplation of the breakdown of a relationship, many people will query and be concerned with what will happen if they have entered a relationship at a point in their life when they have already accumulated valuable assets of their own or if they inherit valuable assets from their parents or family.
Will they lose half of their assets in the event of separation? The short answer is “well, that depends”. First and foremost parties should be aware that from the day you marry, both parties are deemed to acquire an entitlement to each others assets. In a de-facto relationship, this entitlement will be activated after a period of cohabitation of no less than two years. Other criterion can apply, and we will re-visit this in future but if you retain this knowledge and are aware of these basic veracities, you then have the opportunity to plan accordingly to avoid any confusion or altercations and ultimately any major financial setbacks in future.