Do I need a pre-nup?

In the furore over the 2004 marriage ban, the relationship rights that we do have are often forgotten. It also seems that many people were never aware of them. In fact, just a few weeks ago a bereaved gay man wrote in the SSO about losing his partner and not knowing his own rights as next of kin when dealing with his partner’s estate.

In NSW since 1999 lesbian and gay couples have been recognised as de facto relationships. This means that if you live with your partner in a committed relationship, you have rights under almost every aspect of state law (the main exception is adoption). When it comes to laws about property you must generally live together for two years to qualify but for most others there is no time requirement at all.

What this means is that if, after two years of living together, you break up, a partner can make a claim on property that is in your name and will be granted a share of it if they have made significant financial or non-financial contributions to the property. (This includes indirect contributions such as putting money into your shared finances in a way that helped you to pay off the mortgage, even if they never made a direct payment.) Likewise if you died without a will the property would pass to your partner (unless you also have children in which case the property would be shared between them and your partner). And if you left your property in a will to others, your partner could challenge it and claim a share.

These rights are exactly the same as those of heterosexual de facto partners, and they are available automatically, without needing to register or take any steps. This is good news if you thought you had no rights and wanted them. But it may be bad news if you actually didn’t want to share your property or finances with a partner.

Several lesbian and gay property cases have been litigated in NSW since the reforms. They can basically be divided into two camps: my name, my house, and goodbye present.

In the my house cases same-sex couples who have been together jointly paying off a mortgage for 15 or more years separate, but the property is only in one name. This is very common because until 1999 you had to pay stamp duty to add a partner’s name to the title. Whoever has their name on the title then says it’s all mine. Usually the other person is granted some of the value of their contribution.

In the goodbye present cases a younger man has a short relationship with an older man. The older man is wealthier and supports the younger man financially. The younger guy contributes nothing but then claims a share of the property when he leaves. These claims usually fail. But in all of the above, the cases drag on for years and there are huge legal costs.

So what can you do to avoid these situations (apart from staying single)? One option is a binding domestic relationship agreement -“ basically a pre-nup -“ that you can enter into with your partner before or during cohabitation. You need a lawyer to draw one up and both parties have to get separate advice from their own independent lawyer about whether or not the agreement is fair and in your interests.

It sounds like a horrible thing to do when you are in love, but domestic agreements have some very important advantages. Firstly, although they mostly cover financial matters, you can also include a wide range of other things that courts don’t deal with that may be really significant to you -“ such as who gets to keep the pets, or which one of you will stay in your house if you split. For lesbian couples with children these agreements can be a simple way to provide for child support in the event of a break-up -“ an issue that is otherwise incredibly complicated to resolve under existing law.

Domestic relationship agreements involve talking through contributions and expectations in a way that may be hard to do. But in the long run they could save tens of thousands of dollars in costs and months or years of stressful legal dispute. They provide both certainty and flexibility. Only in rare circumstances will courts overturn a properly executed agreement. However, you can both vary it at any time by consent if things change and you want to make new provisions. It is one way to make sure that the new laws work for you, not against you.

Jenni Millbank is associate professor of Law at the University of Sydney and special adviser to Watts McCray Family Lawyers. If you need legal advice you can call Watts McCray on 9635 4266 and speak to Lorraine to make an appointment.