Under our current family law, when relationships break down, people who choose to live together rather than get married are treated differently than people who marry.
Married couples have had the benefit of Parts 5 and 6 of the Family Relations Act under which they are entitled to share equally family assets, subject to adjustments which fall under the heading “judicial reapportionment”. Common law couples did not have the benefit of those provisions of the Family Relations Act and had to rely on a complicated determination of their rights based on trust law – either resulting trust or constructive trust.
Many people chose to live common law with the knowledge that on the breakdown of a common law relationship the trust law applied. However, the law is changing.
Within the next number of months the Family Relations Act is going to be replaced by the Family Law Act. Once the Family Law Act comes into force, married couples and common law couples will be treated the same in terms of property division on the breakdown of their marriage – each spouse will have a right to an undivided one-half interest in all family property and be equally responsible for all family debt, generally speaking. The time frame is from the date on which they started to live together in a marriage like relationship to the date of separation. If a court case is started before the Family Law Act comes into effect, the trust law still applies but as soon as the Family Law Act comes into effect, it will apply.
If, in entering into a common law relationship, it was your intention to keep property separate, now is the time to prepare and sign a cohabitation agreement, clearly setting out how property is to be managed during your relationship and how it is to be divided in the event the relationship breaks down.
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