For richer, for poorer: Money and couples

When relationships break down, dividing cash and property can add to the tension, explains divorce lawyer Jeremy Sutton.

Bank accounts are becoming a common source of strife when a relationship ends. This tension arises from questions of whether separate bank accounts maintained in one party’s own name can be relationship property, and therefore subject to equal division.

PRA 1976

The Property (Relationships) Act 1976 (PRA), provides legal rules that determine the classification of asset as relationship property, or separate property at separation. These apply to the property of married and civil union couples, and of couples in a de-facto relationship of three years’ duration or longer.

Generally, if an asset is determined to be relationship property, the PRA provides it should be divided equally between couples. This does not apply to assets determined to be separate property. These rules apply to the extent that they are not altered by a relationship property agreement.

Bank accounts:

Under the PRA, the starting point is that bank accounts (whether in separate names or joint names), will be relationship property where the bank account funds represent income earned during the relationship. Therefore, the courts will treat any bank account maintained during the relationship as relationship property unless it can be proven otherwise. For example, if a bank account that existed before the relationship is kept separate during the course of the relationship, (i.e. does not contain any income earned during the relationship), it would be determined as separate property.

Intermingling funds:

Issues may arise when separate property is mixed with relationship property, or used for relationship purposes. Generally, bank accounts that hold a mixture of separate property and relationship funds will become the latter.

Tracking payment:

Several banks have introduced phone applications to monitor the types of spending each month. This makes it easier for couples to track the status of the account and determine whether it is being used for relationship purposes.

Disclosure:

Sometimes, the existence of a separate bank account is only discovered after separation.

There is a legal duty to provide full disclosure of relationship property at separation. If the court discovers that there is a nondisclosure of a separate bank account after an order is made, the court has the power to set it aside. Non-disclosure could cause delays and extra legal costs.