Under Australian law, when a de facto relationship ends the rules for dividing up property are the same as for married couples.
It is important to consider whether or not you are in a de facto relationship. If the relationship was to break down, there could be significant financial consequences for you.
What is a de facto relationship?
The Family Law Act sets out the requirements for de facto relationships. A de facto relationship exists when two people live together as a couple (this includes same-sex couples).
The courts will consider various factors to determine the relationship, including:
– the duration of the relationship
– whether a sexual relationship exists
– the degree of financial dependence
– the care and support of children
– the degree of mutual commitment
– the reputation and public aspects of the relationship
The courts have some discretion as to how the above factors are used to determine the relationship. You should talk to your solicitor about your particular circumstances.
What if a de facto relationship exists?
A court will only intervene and make orders in relation to the division of assets and liabilities where the relationship lasted for a period of at least two years, or where there is a child of the relationship.
If the relationship lasted less than two years and there are no children, the courts will only intervene where it can be shown that a serious injustice would otherwise occur. A common example is where a couple purchased a house together and then separate less than two years later. If one party had contributed significantly more to purchase the property, there is a good argument that an injustice would occur if no adjustment is made in their favour.
How will our property be divided?
The division of your property will depend on your circumstances. The Family Law Act sets out a four-stage process which courts must follow when determining a property settlement. The following is a useful guide:
1. Firstly, make a list of all the assets and liabilities of both yourself and your partner. This is known as the “property pool”;
2. Consider the contributions of each of you towards the property pool. This can include different kinds of contributions such as income and assets brought into the relationship, as well as contributions as parent and homemaker;
3. Consider whether there are any factors relating to the future needs of yourself and your partner. For example, differences in health, income earning ability and parenting roles;
4. Finally, consider what outcome would be just and equitable for you both.
This process doesn’t always result in an equal division of the property pool. It’s a good idea to get legal advice so you can understand what’s fair in your circumstances.
Are there any time limits?
Either party can start legal proceedings at any time within two years of separation. Proceedings can only commence after this two-year period in exceptional circumstances.
Can we avoid court?
If you wish to avoid going to court, you might consider a Binding Financial Agreement.
There are various types of binding financial agreements covered by the Family Law Act. These can be prepared before, during or after the relationship.
The binding financial agreement is a contract between you and your partner. It details how your property will be divided in the event that the relationship breaks down. The agreement needs to be prepared by a qualified solicitor and you both need to have independent legal advice. There are some circumstances when a financial agreement won’t be binding on the parties. This is something that requires careful consideration and can be discussed with your solicitor.
If you have already separated you might be able to reach an agreement with your ex-partner. It’s definitely possible to avoid going to court.
If you do reach an agreement the next step is to make sure the agreement is binding and enforceable. It’s important neither of you can change your mind to give you certainty moving forward. A property settlement can be finalised with either an Application for Consent Orders or a Binding Financial Agreement. You should talk to your solicitor about which option is most suitable for your circumstances.
What if we can’t reach an agreement?
If you can’t reach an agreement, it’s a good idea to speak to your solicitor as soon as possible. Court proceedings can be expensive and stressful. Your solicitor can advise you on the steps to minimise the cost.
Our team are ready to assist with your most immediate questions, contact us today. Our free eBook “Is separation in your future?” may also provide you with more insight into property settlement and your options.