Prenuptial and Cohabitation Agreements Legal Services

A cohabitation agreement can be described as a legally binding contract/agreement between two parties that live together or have the intention of living together, in a committed relationship.

The Family Law Act (1975) governs Binding Financial Agreement’s (BFA’s) and a cohabitation contract is a document that lists each persons rights and obligations whilst setting out what will happen to their property in the future, if they separate.

There are many different labels for cohabitation agreements. These include: co-habitation contracts, co-habitation settlements and most commonly, prenuptial agreements.

Prenuptial agreements are signed prior to marriage and they specify what will happen to each parties assets, property, and what obligations both parties have, in the case of a divorce.

Also read: What is the difference between a Binding Financial Agreement and Consent Orders?

A cohabitation agreement can cover a range of issues, including:

• How you will split your finances during the relationship.
• What will happen to your property, if you separate.
• Spousal maintenance.
• Any debt you may have. 
• What will happen to children involved in the relationship, including child support and custody arrangements.

There are many justified reasons why a cohabiting couple would want to formalise their relationship with a cohabitation contract.

Some individuals may think that it is an important step to protect the assets that they bring to the relationship especially if one party is brining more wealth and assets into the relationship compared to the other party.

In the scenario of children from a previous relationship being involved, a party/parent may want to ensure that their wealth goes to their children in the event of their death as opposed to their current partner.

Cohabitation agreements set clear boundaries that explain the division of a party’s property and assets in the event of a relationship break down.

Couples that are cohabitating are not automatically labelled as a de facto relationship and therefore, they do not have the same legal rights and responsibilities as a couple that is married or in a de facto relationship.

This means that if a couples relationship breaks down and they separate, there is no guaranteed right to division of property, spousal maintenance, or superannuation splitting as there would be in the case of a married or de facto couple. 

With prenuptial and cohabitation agreements in mind, some useful things to give thought to are:

• Would you like to protect your assets that you hold from the commencement of the relationship from a claim by your partner?
• How are jointly owned assets that are accumulated during the relationship dealt with?
• How are joint funds being paid to meet a mortgage during the relationship dealt with (even in the instance of one party owning the property).
• Would you like to make a provision regarding spousal maintenance?
• Would you like to keep each parties’ finances separate during the relationship?
• What is the timeframe that you would like to agreement to last for? Agreements can be for the entire duration of the relationship or a set amount of time.
• Will you need to review the agreement on occasion during a certain period or if an event takes place?
• How will the property be divided if the relationship breaks down?

Different individuals will have different viewpoints on cohabitation agreements.

Some may think that relationships should be built on love, trust and respect.

However, others, and especially ones that have been through previous relationship breakdowns, feel that it spares both parties from the stress and acrimony of possible future proceedings if things don’t work out.

If you and your partner are considering making a formal agreement, you will need to have a frank and honest conversation with each other.

Both parties will need to have an open discussion regarding all of the financial assets they hold, and the circumstances they are currently in.

The assistance of an independent legal advisor or even a mediator to resolve any fine prints of the agreement may also be required.

It is important to note that if full and honest disclosure is not made by each party then the agreement could be set aside based on incorrect information which is misleading.

A binding prenuptial or cohabitation agreement may be set aside by a Court based on the reasoning that if the agreement will give raise a substantial injustice toward one party.

Another reason may be that there are children involved and that the party with the caring capacity for the children would experience financial difficulties if the agreement is not set aside.

A relationship breaking down is usually an unforeseeable event and it is important that you take pre-emptive steps to protect your assets and property as soon as you can whilst you and your partner are on good terms.

Many couples who will soon be married or who are currently re-partnering will have to consider making an agreement that will specify and regulate their financial relationship both during the time they are married and also the time that separation or divorce may occur.

• The protection of your assets as if you own property, have savings or have other valuable assets, a cohabitation agreement can protect your interests in the event that the relationship breaks down.
• Transparent financial arrangements are another benefit as having a cohabitation agreement in place assures that finances can be clearly set and this in turn prevents arguments arising during your relationship.
• A cohabitation agreement can also stabilise your relationship as some couples find that it forces them to discuss and agree on important issues upfront.

• Property and assets – which party owns what and what will happen to each party’s property and assets If the relationship breaks down.
• Finances – how parties will manage their finances during the relationship e.g., any joint bank accounts or credit cards.
• Children – if you have children from a previous relationship, a cohabitation agreement can provide reassurance and transparency on how they will be financially supported and what the living arrangements will be for them moving forward.
• Pets – pets may be a less common topic, but a cohabitation agreement can most certainly set out which party will be responsible for them if the relationship deteriorates.