De Facto Property Settlements: What You Need to Know
De facto relationships are legally recognised in Australia, granting partners similar rights to those in a marriage. When such relationships end, understanding the process of property settlement is crucial. This comprehensive guide outlines the essential aspects of de facto property settlements, including eligibility, the legal process, time limits, and considerations for asset division.
Understanding De Facto Relationships and Property Rights
What Constitutes a De Facto Relationship?
Under the Family Law Act 1975, a de facto relationship is defined by several criteria:
Living together on a genuine domestic basis
Not legally married to each other
Not related by family
These relationships are recognised for property settlement purposes, ensuring partners have rights similar to those in a marriage.
Eligibility for Property Settlement
To be eligible for a property settlement, certain conditions must be met:
Duration of the relationship: Typically, the relationship must have lasted at least two years.
Existence of a child: If a child is born during the relationship, eligibility may be established regardless of duration.
Substantial contributions: If one partner has made significant financial or non-financial contributions, they may be eligible.
Registered relationship: In some jurisdictions, registering the relationship can establish eligibility.
The Property Settlement Process
Initiating the Settlement
The process begins when one partner applies for a property settlement. This application can be made through:
Negotiation: Attempting to reach an agreement without legal proceedings.
Mediation: Engaging a neutral third party to facilitate discussions.
Court Application: If other methods fail, an application can be made to the Family Court.
Time Limits
In Australia, there is a two-year time limit from the date of separation to apply for a property settlement. After this period, you may need to seek permission from the court, which is not always granted. Therefore, it’s advisable to initiate the process promptly.
Factors Considered in Asset Division
Contributions
The court assesses both financial and non-financial contributions made by each partner during the relationship. Financial contributions include income and property purchases, while non-financial contributions encompass homemaking and child-rearing.
Future Needs
Consideration is given to the future needs of each partner, including:
Income and earning capacity
Responsibilities for children
Financial resources and obligations
These factors help determine a fair and equitable distribution of assets.
Legal Protections and Agreements
Binding Financial Agreements (BFAs)
Before or during a de facto relationship, partners can enter into a Binding Financial Agreement. This legally binding contract outlines how assets and liabilities will be divided in the event of separation. It’s crucial that both parties obtain independent legal advice for the agreement to be enforceable.
Consent Orders
If both partners 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
Equal Division of Assets
Many believe that assets are automatically divided 50/50 in a de facto separation. However, the court aims for a “just and equitable” distribution, which may not always result in an equal split.
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
Navigating the complexities of de facto property settlements 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.
