How Does a De Facto Relationship Affect Property Division

In Australia, de facto relationships are becoming more common. But what transpires when these relationships end? One of the biggest queries is how property is divided. Let’s delve into what it means for de facto partners when it comes to property division.

Understanding De Facto Relationships

A de facto relationship is when two individuals reside together as a couple but aren’t wed. In Australia, this can encompass both opposite-sex and same-sex couples. For a relationship to be considered de facto, it usually needs to endure for at least two years, unless there are special circumstances like having children together.

Legal Recognition

The Family Law Act 1975 recognises de facto relationships. This means that when such relationships break down, the same laws used for married couples frequently apply. This includes how property is divided.

What Counts as Property?

When we talk about property, we mean more than just a house or a flat. Property includes anything of value that you and your partner own. Here’s a list of what might be considered:

• Real estate
• Cars
• Bank accounts
• Investments
• Pension (retirement savings)
• Personal belongings like jewellery

Joint and Separate Property

In a common-law relationship, property can be joint (owned together) or separate (owned individually). However, when dividing property, it doesn’t always matter whose name is on the deed. The court looks at the whole picture.

How Is Property Divided?

The process of dividing property can seem complicated, but let’s break it down step by step.

Step 1: Identify Property and Liabilities

First, you need to identify all the property and debts. This includes everything you own together and separately, as well as any money you owe.

Step 2: Assess Contributions

Next, the court considers what each person contributed to the relationship. Contributions aren’t just financial. They also include non-financial contributions like home-making and caring for children.

Step 3: Consider Future Needs

The court then examines each person’s future needs. This includes factors like age, health, and ability to earn an income. If one partner will require more support in the future, this can influence how property is divided.

Step 4: Achieve a Fair Outcome

Lastly, the court aims to reach a fair and just outcome. This doesn’t always signify a 50/50 split. It’s about what’s fair considering all circumstances.

Consent Orders and Binding Financial Agreements

Sometimes, couples can agree on how to divide property without resorting to court. They can compose a consent order, which is a written agreement approved by the court. This can save time and diminish stress.

Another option is a binding financial agreement (BFA). This is akin to a prenuptial agreement but for common-law relationships. It specifies how assets will be divided if the relationship terminates.

Why Consider a BFA?

A BFA can provide peace of mind. It permits you to decide on asset division before any issues surface. Nevertheless, it’s vital to seek legal counsel to ensure the agreement is valid and equitable.

What If We Can’t Agree?

If you can’t agree, you might need to proceed to court. The court will utilise the steps we discussed to decide how to divide the assets. Proceeding to court can be costly and stressful, thus it’s usually a last resort.

Important Considerations

Time Limits

If your common-law relationship terminates, you have a limited time to apply for asset division. Generally, this is two years from the date of separation. Missing this deadline can make it more difficult to claim your share of the assets.

Legal Advice

It’s always wise to seek legal advice if you’re in a cohabiting relationship and considering property division. A solicitor can help you understand your rights and options.

Conclusion

Property division in a cohabiting relationship can be complex, but understanding the process can make it easier. Whether you’re dividing property through a court or an agreement, the goal is to reach a fair outcome. Remember to consider legal advice to navigate this journey smoothly.

By being informed and proactive, you can ensure that property division in your cohabiting relationship is handled with care and fairness. Whether you’re just beginning a cohabiting relationship or dealing with its end, understanding your rights and responsibilities will help you make the best decisions for your future.