One of the most frequently asked about topics is de facto couples and property rights.
'What happens to my property if we move in together? '
'I've separated from a de facto, can they make a claim against my property or super? '
We answer these key questions and bust myths we frequently come across
There’s a lot of myths and misinformation out there about what can happen if you and your partner move in together.
Here we explore some basics about the law in this area.
Is this a de facto relationship?
A de facto relationship is defined in the Family Law Act. A de facto relationship is defined as -
a couple living together on a genuine domestic basis
A de facto couple requires that there is more than an intimate relationship going only. Simply being someone’s boyfriend or girlfriend doesn’t make it a de facto relationship. When working out if there is a de facto relationship, the Court will look at the following factors;
(a) the duration of the relationship;
(b) the nature and extent of their common residence;
(c) whether a sexual relationship exists;
(d) the degree of financial dependence or interdependence, and any arrangements for financial
support, between them;
(e) the ownership, use and acquisition of their property;
(f) the degree of mutual commitment to a shared life;
(g) whether the relationship is or was registered;
(h) the care and support of children;
(i) the reputation and public aspects of the relationship
The Court is entitled to have regard to such matters, and to attach such weight to any matter, as may seem appropriate to the court in the circumstances of the case.
When can a de facto partner make a property claim?
For a de facto partner to bring a claim for property division ("property settlement"), there must be one of the following;
1. Cohabitation (living together) for at least 2 years; OR
2. The couple has a child together; OR
3. There is a substantial and significant contribution made by one partner.
Simply contributing to living expenses is rarely going to be considered to be a significant contribution. This is usually steps like making large lump sums payments towards an asset or debt of the other partner, or undertaking significant time and effort renovating their property.
Unless the de facto relationship has one of these three factors, no claim for property settlement under the Family Law Act is available.
The biggest myth - After 6 months my ex can take half of my assets
This is actually three myths in one.
Firstly, as we said above, you must be living together on a genuine domestic basis for at least 2 years before property settlement is available.
Secondly, property settlement involves a division of the "property pool". This includes the assets, superannuation and liabilities of both parties. It is never a division of only one person’s assets.
Thirdly, there is no automatic “50% / 50%” division of property in Australia, so there is no automatic right for your partner to claim 50% of the property pool.
How does property division really work?
Property settlement is the same for de facto and married couples. If you apply to Court, if the Court is satisfied that it is “just and equitable” to consider changing the legal ownership of property, then the Court will go through the following steps;
1. Determine the property pool.
This is a list of all of the assets, superannuation and liabilities of either party and the value of
each item.
2. Determine the contributions that each of you made to the property pool
Contributions can be financial and non-financial, such as where one party has contributed by caring for the children of the relationship, by undertaking homemaking tasks, by assisting in a business without being paid.
Non-financial contributions are weighted the same as making financial contributions.
The Court stipulates a percentage that they consider each party has contributed to the pool.
3. Determine the “future needs” of the parties.
The Family Law Act contains a list of a range of factors that could justify an adjustment of the percentage that each party should receive. They involve looking at the future of the parties and are referred to as "future needs factors". They include things like the respective age and health of the parties, whether one party has a lower income and earning capacity and whether this is related to one partying providing greater care of the children following separation.
The Court can adjust the percentage from step 2 to take into account these factors.
4. If the outcome is fair, or “just and equitable”
Once there is a proposed division of the parties assets, superannuation and debts between them, the Court views the overall outcome. If the Court considers that the final division might not be fair to one party of the other, they can make further adjustments so that there is a fair outcome between the parties.
How do I protect my assets from property settlement?
The only legally binding way to stop a partner from making a claim for property settlement is to enter into a Financial Agreement (sometimes called a BFA or Cohabitation Agreement).
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