When you’re young and single, you’re an independent person. You have your own friends, routine, goals, hopes and dreams – and you have your own separate property. You own what you own and you know where you stand.
When you enter into a relationship though, things change. Your friends become their friends; you move in together, and you start building a life with another person in it. How much of your separate life you bring into a relationship is different for every couple but whether you choose to share it or not, your separate property can easily become relationship property.
Relationship property is defined in detail under the Property (Relationships) Act 1976. It includes all property acquired by either partner after the relationship began. This definition is broader than you may think and this was recently confirmed in an appeal to the High Court.
The case concerned an artist who had been married to her husband for 20 years. During their marriage, the artist painted hundreds of paintings and made an income by selling the paintings and printed copies of them. The paintings are property acquired by the artist during the relationship, so they meet the definition of relationship property in the Act. This means they will usually be split equally on separation.
Interestingly, the High Court also determined that the copyright in the paintings (the ability to control who can use and re-print the images) is relationship property as well. Copyright is a proprietary right and it can be worth a substantial amount of money. If the copyright was created or acquired during the relationship then the value or the right itself will also be split equally on separation.
If you’re an artist, writer, musician or entrepreneur you will need to consider whether you want to protect the valuable copyright you are creating.
The only certain way to do this is to protect your separate property at the start of your relationship with a Contracting Out Agreement. However, anyone in a de facto relationship with assets should consider a Contracting Out Agreement. For more information on Relationship Property or on entering into a Contracting Out Agreement please contact Emma.