De Facto Property Settlement - Your Rights & Entitlements
by Brampton Keats | 4 min read
Did you realise that separating de facto couples have largely the same property rights and entitlements to those of married couples? We will discuss your options and the best course of action when separating from a de facto relationship.
Definition Of A De Facto Relationship In Australia
The basic definition of a de facto relationship in Australia is when two partners are living (or have lived) together on a ‘genuine domestic basis’. You can be from the same or opposite sex and must not be married or related to each other.
There are many factors that determine whether you are living together on a genuine domestic basis. The easiest way to think about it is whether you have lived together in a ‘marriage-like’ way. There is no rule with regards to minimum amount of time spent in a relationship, though it is generally accepted that a minimum period of 2 years qualifies as a de facto relationship (however exceptions do apply).
For a more in-depth discussion, read our article on what constitutes a de facto relationship in Australia
Your De Facto Relationship Entitlements
If you reside in any state or territory in Australia (except WA), the applicable law governing your de facto relationship entitlements is the Family Law Act.
Under this legislation – all de facto couples have the same rights as married couples in relation to the distribution of property. So even though you are not married, under Australian law, you have similar property settlement rights.
In other words, if you are in a de facto relationship, your legal rights and responsibilities are comparable those of married couples. As such, you have the right to a de facto property settlement.
What Property Can Be Settled?
The term ‘property’ has a broad interpretation by the Family Law courts. It includes both your assets and liabilities.
More specifically, property can include such items as:
- Real estate, whether occupied yourselves or for investment purposes
- Cash held in bank accounts
- Motor vehicles
- Household contents and personal effects
- Shares held
- Interest of a partner in a partnership
- Trust assets
- Long service leave entitlements
What Options Do I Have When Ending A De Facto Relationship?
If you are separating from your partner and ending a de facto relationship – you have essentially 2 options:
- Arrive at a de facto property settlement privately through a De Facto Separation Agreement, (also known as a Binding Financial Agreement)
- Get the court to impose a settlement on you
It is obviously a lot cheaper, quicker and less stressful to arrive at a de facto property settlement privately (option 1). In fact, the law itself encourages parties to settle their differences without resorting to litigation.
We will now discuss each option in more detail.
Option 1: De Facto Separation Agreement
Under the Family Law Act, a couple separating and ending a de facto relationship can use a Separation Agreement (also known as a Binding Financial Agreement) to arrive at a de facto property settlement. It is a legally binding contract, enforceable under Australian law, which states how two former partners have agreed to divide their assets and finances. This helps prevent any future arguments and provides each party with future financial protection, entitlement and certainty.
There are many reasons why Separation Agreements are preferable to court-imposed orders. They:
- save money on expensive legal and potential court fees
- avoid lengthy, complicated litigations
- prevent an imposed property settlement by a court
- give couples a lot more control and freedom over their circumstances
- minimise conflict the minute lawyers are introduced
- allow couples to arrive at a more amicable, less stressful resolution
- resolve all matters immediately, so couples can move on quicker with their lives
There is no requirement for when a De Facto Separation Agreement can be created. Therefore an agreement can be created before cohabitation, during cohabitation, or upon the breakdown of the de facto relationship.
We highly recommend that you prepare a De Facto Separation Agreement yourself before taking it to a lawyer. Instead of getting a lawyer to draft one from scratch, you can save yourself $1000s in expensive legal fees if you fill out a professional, ready-made template first. From there, 9 out of 10 times you will only need to have one single, simple meeting with a lawyer – to independently proof-read and verify the agreement. This usually takes less than 30 minutes.
For this reason, this option is extremely popular amongst de facto settlements. The secret is finding a reputable company that can provide you with a professional De Facto Separation Agreement.
Option 2: Court-Imposed Settlement
In the unfortunate case where you are unable to reach an agreement with your ex-partner, you can make a property order application to both the Family Court of Australia and the Federal Magistrates Court of Australia. An application for de facto property settlement must normally be made within 2 years of the end of the relationship. The court’s decision is then made through a court hearing.
There are a series of key factors the court will look at when assessing your de facto property settlement:
- Calculating the total assets and debts of both parties (which includes anything acquired before or during the de facto relationship, as well as after separation). This is an extremely complicated procedure that requires valuations, working out which party has more influence over assets etc.
- Assessing the contributions by each party to the de facto relationship. There are many types of contributions that will be taken into account:
- direct financial contributions by each party such as wage and salary earnings
- indirect financial contributions by each party such as gifts and inheritances from families
- non-financial contributions to the de facto relationship such as homemaking and caring for children
- the initial contributions prior to the de facto relationship
- Consideration of future requirements for both parties. A court will consider factors such as capacity to earn money, age, health, financial resources, new relationships and care of children.
As you can see, it is an extremely long winded and complicated process.
It is important to note that if you choose the court route, there is no exact formula that will be used to divide your property – the outcome is uncertain and often unpredictable. The decision is left entirely with the judicial officer and his/her decision is made after all the evidence is heard and what they consider “just and equitable” to both parties.
If you are in a de facto relationship and have decided that you are entitled to a property settlement – it is always advisable to come to a property settlement privately as opposed to a court-imposed settlement. A legal and binding way to accomplish this is through a binding financial / separation agreement, tailored specifically for de facto relationships. The practical result is exactly the same as a court imposed decision – a legally enforceable settlement, but without the associated time, cost and uncertainty involved with court action.
If you decide to go down the binding financial / separation agreement path, we highly recommend that you save yourself the time, money and effort and begin by preparing your own agreement. The easiest way is to use a professional, up-to-date template, tailored specifically for de facto separations and with step-by-step instructions. This will save you a lot of time and legal costs associated with getting one drafted from scratch.
ABOUT BRAMPTON KEATS
We are an Australian-based company that specialises solely in divorce / separation education, templates and products. Our agreements have been prepared by experienced lawyers with backgrounds in top-tier law firms, who have been admitted to both the High Court of Australia and the Supreme Court of Victoria.
For more information about our templates, please click here.