What Happens to Your Assets When a De Facto Relationship Ends?
De facto relationships, whether heterosexual or same-sex, are legally recognised in Australia under the Family Law Act 1975. When such relationships end, understanding how assets are divided is crucial. This article provides a comprehensive overview of the process, rights, and considerations involved in asset division following the breakdown of a de facto relationship.
Understanding De Facto Relationships and Legal Recognition
What Constitutes a De Facto Relationship?
A de facto relationship is defined under Section 4AA of the Family Law Act 1975. Key factors include:
Living together on a genuine domestic basis.
A relationship that is not legally married.
Not related by family.
Having a mutual commitment to a shared life.
Financial interdependence.
Shared responsibilities and care of children.
These criteria ensure that de facto couples are afforded similar legal rights as married couples, particularly concerning property division upon separation.
The Property Settlement Process After Separation
Time Limits for Property Applications
Applications for property orders must be made within two years of the breakdown of a de facto relationship. If this period has passed, permission from the court is required to proceed .
Steps in the Property Settlement Process
Identifying the Property Pool: This includes all assets and liabilities owned by either or both parties, such as real estate, bank accounts, superannuation, and debts.
Assessing Contributions: The court evaluates both financial and non-financial contributions made by each party during the relationship.
Considering Future Needs: Factors like age, health, income, and care responsibilities are taken into account to ensure a fair division.
Reaching an Agreement: Parties can negotiate a settlement, which can be formalised through Consent Orders or a Binding Financial Agreement.
Factors Influencing Asset Division
Contributions During the Relationship
Both financial contributions (e.g., income, mortgage payments) and non-financial contributions (e.g., homemaking, child-rearing) are considered. The court aims to recognise the value of all contributions to the relationship.
Future Needs and Circumstances
The court assesses each party’s future needs, including:
Age and health status.
Income and earning capacity.
Responsibilities for children.
These considerations ensure that the division of assets is equitable and just .
Legal Protections and Formal Agreements
Binding Financial Agreements
Couples can enter into Binding Financial Agreements (BFAs) to outline how assets and liabilities will be divided in the event of a separation. These agreements must be signed by both parties and witnessed by independent legal advisors to be enforceable .
Consent Orders
If both parties agree on the division of assets, they can apply to the court for Consent Orders. Once approved, these orders are legally binding and enforceable .
Common Misconceptions About De Facto Property Settlements
Assumption of Equal Asset Division
Many believe that assets are automatically divided 50/50 in a de facto separation. However, the court considers various factors, and the division may not be equal but rather just and equitable .
Exclusion of Pre-Relationship Assets
Assets acquired before the relationship may still be considered in the property pool, especially if they have been used for the benefit of the relationship or have increased in value due to joint contributions .
Seeking Legal Advice and Support
Navigating the complexities of property division in de facto relationships can be challenging. It’s advisable to seek legal counsel to understand your rights and options. Legal professionals can provide guidance tailored to your specific circumstances and help ensure a fair outcome.
Conclusion
The end of a de facto relationship involves a structured legal process for dividing assets. Understanding your rights and the factors influencing asset division is essential. By seeking appropriate legal advice and considering all relevant factors, you can navigate this process effectively and ensure a fair settlement.
