There is often confusion around what de facto partners are entitled to by way of property adjustment when a relationship has ended. A common question we hear asked is ‘can a de facto take half?’ A common misconception is that de facto couples and married couples are treated differently when dividing their assets. Due to significant changes to the Family Law Act a number of years ago, there is next to no distinction between de facto and married couples and the principles applied to the division of their assets on separation.
What is considered a de facto relationship?
A de facto relationship, under the Family Law Act 1975, is defined as a relationship between two people (who are not legally married or related by family) who, having regard to all of the circumstances of their relationship, lived together on a genuine domestic basis.
What are the circumstances that the court must consider to determine the existence of a de facto relationship?
- The nature and extent of common residence
- Length of the relationship
- Whether a sexual relationship exists (however you do not have to have a sexual relationship to be in a de facto relationship)
- Degree of financial dependence or interdependence
- Ownership, use and acquisition of a property
- Degree of mutual commitment to a shared life
- Whether the relationship was registered
- Whether they share care and support of children
- They have a public reputation of being in a relationship with those around them.
If you need assistance from the court to divide your property with your former spouse and you have been in a de facto relationship, then one of the factors the Court is going to be looking at is how long you have lived together and when did you separate. You only have two (2) years after separation to ask a court to assist you to divide the assets where there is a dispute. After that, you will need to ask the court for leave (permission) to make an application.
To be considered a de facto couple you need to:
- Have lived together for a minimum of two years; or
- If you have not lived together for two years but have a child of the de facto relationship; or
- The person who is going to Court to ask for the Order has made substantial contributions and the court failing to make an order would lead to serious injustice.
Can a de facto take half of the assets?
Just like with married couples, there is no starting proposition in the Family Law Act that the property of a de facto couple will be divided equally.
A de facto partner can, however, receive an adjustment of 50% of the asset pool, if that is the appropriate outcome. The appropriate outcome will depend on an analysis of a number of factors (just like with married couples) that include financial and non-financial contributions and homemaking contributions and having regard to the future needs of the parties. De Facto couples can also be liable to provide spousal support in certain circumstances where one of the parties may be unable to support themselves. Just like married couples, it is possible for the superannuation interests of de facto couples to be split as well.
What can you do to protect assets in a de facto relationship?
If you are wanting to avoid a dispute about the division of assets after the breakdown of a de facto relationship it is possible to enter into a financial agreement that will determine what happens to property on the breakdown of the de facto relationship. You may enter into this agreement before you start living with your partner or during the relationship. Both parties to the relationship will require independent legal advice about the agreement. Entering into an agreement of this kind removes your right to make an application to the Family Court that is contrary to the terms of the agreement.
Every relationship is different, so every case is treated differently, especially when you have children.
A lawyer can be invaluable in ensuring you properly document any agreements. This is because you want to make sure that if you are entitled to things such as stamp duty relief on a house transfer that the proper documentation ensures you do not pay more taxes than you need to.
Also, get advice about your estate planning position. De factos have rights to the death of a partner. So it is particularly important for people who already have children from an earlier relationship to have their wishes well documented.
Whether you are considering living with your partner or you are already living together, you may wish to seek advice about your circumstances. At DDCS Lawyers, we work with de facto couples daily to assist them with their needs. If you need assistance, contact our team on (02) 6212 7600 to book a consultation.