If you are entering a new relationship after divorce or the death of your spouse or partner, then take the time to understand the landscape. Carefully assess the assets/liability profile and how that will likely expand in the next ten years. This is your carry bag. Not understanding the landscape will expose you to commercial destruction or, at the least, a diminution of your carry bag.
A landscape is distinguished by three types of relationships:
- Marriage – governed by the Family Law Act (Cth)
- De facto relationship – governed by the Family Law Act (Cth)
- Domestic relationship – governed by the Family Relationship Act (SA)
The climate in this landscape will change if, during the relationship, you (1) separate / divorce or (2) die.
This article deals only with death during the course of a de facto relationship or a domestic relationship.
In this scenario, you will either die with a Will in place or with no Will in place. In either case, the surviving party may have the basis for a family provision claim.
A Will, at this point, is crucial, not only for the protection of your estate but also for the beneficiaries you want to benefit from the estate.
Take, for instance, a mature couple coming together after the death/divorce of their respective former spouse/partner – each with their personally owned assets and no desire to marry or part with those assets.
In the early stages (Stage 1) of the relationship, they will not qualify as de facto or domestic partners, but from 2 to 4 years and beyond, they may qualify (Stage 2).
Not providing for each other in Stage 1 would mean that it would be difficult for the surviving partner to mount a claim. From Stage 2 onwards, a survivor claim has the potential to gather strength.
One way of dealing with this situation is to have a clear understanding of when the transition from Stage 1 to Stage 2 is likely to occur and then to have an agreement, preferably in writing, setting out the reasons for the desire of the parties to keep their assets separate. Their respective Wills would reflect an integral part of their agreement and could include a detailed reference as to the reason and basis for keeping their assets separate in their respective estates. It is to be noted that this fact scenario would allow the parties to enter into a Financial Agreement under the Family Law Act made either during or after the breakdown of a de facto relationship.
The alternative is that there is no transition from Stage 1 to Stage 2 during the course of the relationship. This would be because the parties have no desire to have a relationship as a couple living together on a genuine domestic basis. This is sometimes described as having a friend with benefits.
The main point to understand in this landscape is that it is populated with complexities and financial traps. The quality and scope of your Will is a first step in addressing the complexities and the dangers that lie in wait for your carry bag. It may not, however, be the only or final step you require. Good legal advice will be the nightcap. So, as well as seeing your doctor, see your lawyer.
Additionally, the landscape is changing. The recently introduced Succession Act sets out a deliberate bias towards the Will maker’s wishes in family provision claims. Section 116(20)(a) of the Act states that “in determining whether to make a family provision order the wishes of the deceased person is the primary consideration of the Court”. How this will be interpreted in practice by the courts remains to be seen.
