A de facto relationship is a domestic relationship in which two people, who aren’t married to one another, live together as a couple. Living together on a genuine domestic basis is how the law describes this type of arrangement. Sometimes, a person who is still legally married to a third party can be considered a de facto partner. Normally, however, this situation would only arise after that person is separated from the husband or wife.

What Does the Law in Australia Say About De Facto Relationship?

At the present time, different laws apply for marriages and de facto relationships. If you are married, then the issues are governed by the federal Family Law Act. If you are in a de facto relationship, then state law applies, and this varies between states and territories. There have been calls for a uniform law to apply for the whole of Australia, but the federal parliament hasn’t yet considered legislation to achieve this, so it is unlikely to happen any time soon.

Have it in mind that when courts are dividing the property of married couples at the breakdown of a relationship, they generally treat the marriage as a social and economic partnership. The courts consider not only the contributions that each person has made to the relationship, but also to their future needs, and the needs of any children.

Additionally, the courts will take into consideration who brought the property into the relationship; however the longer the relationship lasts, the less significance is given to prior ownership of the property. Similar principles are usually applied to de factos under state laws; although in some states the courts can only consider past contributions, not future needs.

State laws give the courts the power to alter property rights when an unmarried couple has been together for a certain period of time, or other grounds may apply. The normal rule in every state and territory except South Australia is that if the parties have been together for at least two years, the courts still reserve the power to make orders in relation to the assets of the parties. In South Australia, however, this period is three years.

Also, note that registering your de facto relationship usually gives it the same rights as married couples under Australian law. However, sometimes there may be an issue in proving the relationship existed. Married couples get legal documents as proof of their marriage, but it can be quite hard for de facto partners to establish the relationship, especially if one party denies there was a genuine domestic basis to the relationship.

South Wales Law on De Facto Relationship

In New South Wales, you can register your de facto relationship on the NSW Government’s Relationships Register. The main reason for the Register is to give legal recognition to a de facto relationship. Once registered, the relationship may not need to meet any other time requirements before you gain legal rights over property, to apply for migration visas, superannuation division, and more.

If your relationship has ended, you may have de facto relationship entitlements to your partner’s property, as well as the property of the relationship. They are sometimes known as de facto break-up entitlements. Your de facto relationship property entitlements depend on your circumstances. It is unlikely your entitlements will be the same as anyone else’s, simply because every situation is unique.

There are some basic rules and guidelines under Australian family law for working out the property entitlements for former de facto partners. The most important consideration is the time limit. You have two years from the date of separation to make a property claim in the Family Court. Usually, a claim is only made after attempts to reach an agreement have failed, so this two-year time limit is typically used by the parties to try and negotiate an agreement.

2 Ways to Protect your Assets in a De Facto Relationship

There are two main ways to help protect your belongings should your relationship break down:

  1. Draw up a Financial Agreement

It is possible, however, to come to an agreement about what will happen to your assets if you split up, whether you get married or not. There are two main ways to make an agreement.

  • Quarantine

The first option is to come to an agreement that any property brought into the relationship won’t form part of the property for distribution if the two parties decide to separate. For instance, you can both agree that your investment property, and any inheritance you receive, will be yours and yours alone.

Every other asset that you acquire together in the course of your relationship can be divided in accordance with the usual principles that will apply to the circumstances that exist at the time of separation. The property that you bring into the relationship will thereby be ‘quarantined’ from division.

Note that the issue with this arrangement is that it doesn’t necessarily protect your interests very well. The courts may not make orders in relation to the property that’s been quarantined, but it may choose to give more of the jointly acquired assets to your former partner because you have the investment property or inheritance.

  • Comprehensive Agreement

The other agreement option determines how all of your property will be divided on separation, whether you own it now or will acquire it in the future. Have it in mind that such an agreement is more or less preferable in terms of making comprehensive arrangements in the event of a relationship breakdown. Indeed it can be very challenging to predict what your circumstances may be in the future.

An agreement that may look fair if there are no children – for example, that each party keeps whatever they brought into the relationship, and the rest is divided equally – may look unfair if a child is born into the relationship and one of you is the primary carer of that child. It is also hard to anticipate future events.

For instance, what happens if you become disabled and can’t work, and your partner has to take over the payment of the mortgage on your investment property? An agreement saying that the property will always remain entirely yours may seem fair at the time but can become unfair as a result of this change in circumstances.

  1. Keep Finances Separate

Should you not be able to draw up a legally Binding Financial Agreement, at a minimum, you should agree to keep your finances separate, including;

  1. No intermingling of finances
  2. No joint bank account
  3. No responsibility for each others’ debts
  4. Each person makes their own decisions on the outgoings of their wages
  5. There should be no evidence of intent to provide for the other in a will or as a beneficiary in superannuation funds or life insurance policies (there should be no evidence of financial planning for their future together)
  6. Acquired property should be in one person’s name with no joint ownership, and the other person should be contributing to cover all normal living expenses

Conclusion

In certain situations, a carefully constructed trust could provide you with protection, as long as you are prepared to give up all the rights of ownership and control over the assets, and you have trustees who will be completely independent of you. In other circumstances, placing the property in the hands of a relative or friend may help protect your assets in the event of a relationship breakdown.

Striving to negotiate a legal agreement that will meet both parties’ needs can be a daunting and emotional experience. However, irrespective of how simple or complicated the division of your assets may appear to be, it is important that each couple has access to independent and unbiased legal advice.

Ajaero Tony Martins