How to Protect Your Assets in a De Facto Relationship
Entering a de facto relationship can bring joy, companionship, and shared life goals—but it also raises legal considerations you shouldn’t overlook. In Australia, de facto partners have many of the same rights as married couples under the Family Law Act 1975, including rights to property and spousal maintenance. Without proper planning, you risk losing significant assets should the relationship end. This guide explains smart strategies to safeguard your wealth.
Why Asset Protection Matters
Legal Exposure of Assets
De facto partners may claim a share of property—even if acquired before the relationship or intended for others, such as children. Courts assess **all assets and liabilities** at separation, including real estate, vehicles, superannuation, business interests, and debts. This applies even to assets obtained before the relationship if they were used or improved during it
Time-Limited Claims
You have **two years from the date of separation** to file a property settlement claim. Failing to do so may still allow a claim, but requires court permission—a complex and uncertain process
Key Strategies to Protect Your Assets
1. Enter a Binding Financial Agreement (BFA)
A **Binding Financial Agreement** is the most effective tool for asset protection in de facto relationships. Also known as a prenuptial or separation agreement, a BFA can specify how assets and liabilities will be divided if the relationship ends
Timing: Can be made before, during, or even after separation
Legal Requirements: Both parties must receive independent legal advice, and lawyers must certify this advice
Benefits: Creates legal certainty, reduces dispute risk, and protects inheritances and business interests
Only about 6% of Australian couples hold a BFA, highlighting how often this tool is overlooked
2. Use Trusts to Safeguard Assets
Placing assets (like property or business interests) in a **discretionary or family trust** can help protect them from partner claims. While courts may scrutinize trusts, a properly structured trust can provide insulation by separating legal control from beneficial interest
Protects assets by holding them on behalf of beneficiaries without direct ownership.
Risks: Poorly designed trusts may still be challenged in court
3. Maintain Clear Records and Transparency
Careful documentation demonstrates the origin and purpose of each asset:
Retain proof of inheritances, gifts, or pre-relationship purchases.
Log financial contributions (savings, mortgage payments) and non-financial contributions (home duties, renovations) by both partners.
Record legal documents, communications, and independent advice.
Transparency enhances the enforceability of BFAs and strengthens your case in disputes
4. Regularly Update Your Estate Planning
Ensure that your **will, super beneficiary nominations**, and any testamentary trusts reflect your intentions. A recent Federal Court case showed how unintended super allocations can occur without a binding nomination
When to Seek Legal & Financial Advice
Early Relationship Stage
Even before moving in together, speak to an experienced **family lawyer** or **estate planner**. They can explain whether a BFA is appropriate and help draft it correctly
Mid-Relationship Milestones
Significant events—like buying property together, expanding a business, or having children—warrant a review of financial arrangements, trust structures, and BFAs
Pre-Separation Planning
The period before separation is critical. A well-timed BFA, clarity in record-keeping, and updated legal documents can protect both assets and children’s inheritance
Limitations & Considerations
No Absolute Guarantees
BFAs are strong but not infallible. Courts may set them aside if there was **undue influence**, **non-disclosure**, or they are **unjust**
Legal Costs
While BFAs and trusts require upfront legal fees, they typically cost less than **long court proceedings** in the event of a breakdown
State Differences
State-based rules and recognition of relationships can vary—consult a lawyer familiar with **Victorian/Queensland etc. de facto laws**
