Jenny had been married for 10 years and had three young children when her marriage came to an abrupt end. Jenny and her ex-husband agreed that she would receive the family home - which was now mortgage free - so that she and the children could remain living there. Jenny’s ex-husband retained all the money in their savings account and also took the boat and the holiday home.
Jenny felt fortunate to have a home for herself and her children to live in, but she struggled to meet day-to-day expenses now that she had no savings to draw on. When she met Peter, it felt like a dream come true. He was so helpful, constantly buying groceries for her, helping with the children and doing work around the house. After a few months, Peter moved into the family home and again Jenny was happy.
Several years went by and then Jenny and Peter started to have relationship problems. Jenny made a decision that she needed to see her lawyer to check whether the family home was still protected for her and the children, in case the relationship did come to an end. Jenny was quite shocked to learn that once she and Peter had been together for three years, the family home would automatically be classified as relationship property and would be divided equally between them, if they did separate. It didn’t matter that this was the only asset Jenny had been left with from her first marriage - and she had always expected it would just be for the benefit of herself and her children.
Jenny’s lawyer talked to her about entering into a contracting out agreement. This is an agreement where she and Peter could agree to “contract out” of the equal sharing presumption in the Property (Relationships) Act 1976. They could specifically agree that the family home belonged to Jenny only. Other assets that Peter had acquired before their relationship, such as his rental investment, could also be specifically provided for as his separate property.
It was not an easy discussion to have with Peter, but Jenny realised that it was really important to sort out as soon as possible, for the sake of her children.
If you have any questions about relationship property matters, please contact us for good legal advice that will give you peace of mind.