Why and when to use a separation agreement?

Last updated: November 2022 | 4 min read

What is a separation agreement?

A separation agreement is a document in which separating couples define how their joint assets and responsibilities will be divided between them. They may be used by married or unmarried couples, and are often used instead of divorce proceedings.

It is important to note that such agreements are not legally enforceable - they can be challenged by either partner - but they do carry weight if the court considers them a fair settlement.

Why use a separation agreement?

If you've been living together with a partner for some time, you are bound to have been sharing a whole host of things which make up normal life. A home, a car and a joint savings account might be the barest bones... and you've probably shared responsibilities too – financial outgoings such as bills and mortgage payments, and parental responsibilities. You are also likely to have plans for sharing things which have not yet come into being – potential income from pensions and pay-outs, or the cost of schooling your children. A separation agreement aims to formally address what will be done with these jointly-held interests, and to set out any steps that need to be taken (for example selling property in order to split the revenue generated).

Drawing up a separation agreement is an opportunity for both partners to decide what is fair and to mutually acknowledge this decision. This can go a long way towards avoiding misunderstandings and confusion later on. So why would you use a separation agreement instead of formal divorce proceedings if you've been married?

When to use a separation agreement

If you are married and are separating...

You may wish to use a separation agreement as an alternative or precursor to divorce, either because you don't want to divorce or because you cannot yet begin legal proceedings. In Australia you must be married for at least a year before you can apply for divorce.

If you can't satisfy these legal requirements for divorce, a separation agreement is a way of settling how you divide your assets and responsibilities. Using a separation agreement has the advantage of leaving open the possibility of reconciliation, and there is no need to take the matter to court. If the separation then progresses to divorce, the agreement can be used as proof of the date of the separation and form the basis for the court's decisions on how assets and responsibilities will be divided. The court has discretionary power to vary or overturn a separation agreement, since it is not legally binding. However the court is likely to adopt the agreement provided it is fair to each spouse and to any children of the marriage and there has been no change of circumstance to render it inappropriate.

If you are not married and are separating...

Unmarried couples may also find a separation agreement a useful way of dealing with the issue of splitting jointly-held assets and responsibilities. For example a co-habiting couple may want to formally agree on how to split the remaining rent owed on a fixed-term tenancy.

If you are not married you might find separation decisions difficult precisely because there was neither formal marriage nor the opportunity for agreement on joint assets and responsibilities. The way in which you share joint interests may have evolved over time in an undefined way. Making a separation agreement will give you the opportunity to decide what is fair for each party and mutually agree on that decision, reducing the chance of misunderstanding or unfairness. Even if you are separating amicably, remember that personal and financial circumstances can change - people find new partners and develop different financial requirements - it's a good idea to avoid doubt and conflict further down the line by formalising the separation with an agreement.

Further information and useful documents

We have another article that might be of interest on what to include in a separation agreement.

Of course, if you'd like to write your own agreement, you could our separation agreement template as the basis for it.

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