De Facto Property Settlement

De Facto Property Settlement

De Facto Property Settlement

Find out everything you need to know about de facto property settlement, your rights and entitlements and what defines a de facto relationship.

Knowing what constitutes a de facto relationship can be tricky, as there are many variable factors. Understanding your legal entitlements, the process for dividing property and what exactly constitutes “property” is crucial when a de facto relationship breaks down. Let’s take a closer look.

What is a De Facto Relationship?

A de facto relationship is a couple who are not legally married but have the same rights as a married couple, who can be the opposite sex or a same sex couple. To be defined as de facto, the couple needs to live together on a genuine domestic basis. In most cases, it is for two years without separation.

If a person is married, they can also be in a de facto relationship with another person. De facto couples are not mutually exclusive, and they can be in more than one de facto relationship at a time.

What Factors Determine a De Facto Relationship?

It can be challenging to define the length and validity of de facto relationships because there is no marriage date. You can formally register your relationship through the registry of birth deaths and marriages in your state or territory. You will receive a certificate that can be used for verification of your relationship.

For a family law court to determine if the de facto relationship existed, they will consider the following factors:

  • The relationships duration
  • The living arrangements
  • Whether a sexual relationship exists
  • The financial interdependence between the couple
  • Joint property ownership and use
  • Relationship registration under state law
  • The care and support for children 
  • Public aspects of the relationship

Former De Facto Partners Rights in Property Disputes?

In Australia, under the Family Law Act, your rights and entitlements concerning the property division are the same as that of a married couple, and similar rules apply.

Under the Family Law Act provisions, when commencing settlement proceedings, you must meet at least one of the following conditions:

  • The relationship should have been a minimum of two years
  • There is a child from the relationship
  • Substantial contributions of a financial nature were made to the relationship
  • The relationship was registered de facto under a state or Territory law
  • At least one third of the relationship was spent in the same state (except Western Australia). 

Applications for property or child matters should be made through the family court in WA.

Binding financial agreements which outline how to manage your assets can help validate your financial contributions in the case of a separation. Obtaining legal advice can ensure you understand your rights and entitlements.

What is Dealt With in a Settlement Dispute?

There are three claims under the Family Law Act that de facto couples can make when dealing with property disputes, dividing property, maintenance and superannuation. The application for spousal maintenance and dividing property can be made in the federal circuit court or family court.

Dividing Property

When de facto couples separate, they need to divide their property and assets. Finalising their financial relationship is the primary purpose of a property settlement. The settlement will include all assets and liabilities, such as family homes, businesses, vehicles, money, investments, jewellery, stocks, shares and debts.

A property adjustment will be made depending on what each party brought to the relationship and their circumstances.

If the parties can agree to a settlement without going to family court, it can save them a lot of time and money, resulting in a more favourable outcome for both parties.

Otherwise, a court will determine how their de facto property is divided using the legislative framework as a guide.

  • The court will need to decide if a settlement is fair and equitable. In circumstances where a relationship was short, and parties maintained individual finances, it may not be necessary to adjust the interests.
  • The court will gather an inventory of all assets and liabilities and value the total asset pool.
  • The contributions from each party will be determined. They can include direct financial contributions, non financial contributions or parental contributions. A direct financial contribution could be a salary, mortgage repayments or renovations. Indirect financial contributions are also considered, which could include payment of household bills.
  • The court will consider the future needs of both parties. With reference to:
    • Age and Health
    • Personal Financial Circumstances
    • Mental Capacity
    • Future Earning Capacity
    • Care and Responsibility for their Children

Seeking independent legal advice will help to ensure that you understand your rights concerning the division of property.

Maintenance

In de facto relationships, there are occasions where one individual may have financial dependence on the other and are unable to work or support themselves. It may be due to illness, health issues, old age, or the need to care for their children. A de facto party can apply for spousal maintenance, which is payments that are made either as a lump sum or as periodically from the other party.

To obtain a court order for maintenance, certain factors will be considered:

  • Age and health of both parties
  • Income and financial resources
  • Ability to earn an income
  • Duties to care for children and continuing parental role
  • Financial needs
  • Eligibility for payments from Centrelink
  • Reasonable standard of living
  • Length of the relationship
  • Would the payment increase their future earning capacity
  • Child support payments
  • Other relevant factors

If a de facto party cannot support themselves and if hardship is caused to them or the child of the relationship, maintenance may be ordered. If they have been out of the workforce for a long time, which has resulted in a reduction to their capacity to earn, the applicant may be awarded maintenance to retrain or look for work. They need to be able to prove that their ex partner can pay for the maintenance.

The court will order how much is paid and the duration. 

The order will cease after a fixed date, or when the court has discharged it, a remarriage occurs or death of either party.

Superannuation Split

The court considers superannuation funds a part of the asset pool in a property settlement. It is not compulsory to split the super. It may be used as a part of the property settlement, each party keeps their super in their name, and the difference is offset, so one party receives a more significant share of the property.

If the parties can not decide, the court will make calculations to determine the fair share for each party. Regardless of the split, the super will only be available upon retirement age.

Understanding legal rights and discussing matters with an experienced lawyer will ensure that parties receive the correct entitlements.

Is There a Time Limit?

Finalising settlement quickly after a divorce is crucial as time limits apply, particularly if you are going to court for consent orders.

Under the Family Law Act, a de facto property settlement must be applied for within two years after separation. Otherwise, they will need to apply to the court for property orders

For married couples, the limit is 12 months from the date of divorce.

How to Formalise an Agreement?

There are several ways to formalise your settlement with your de facto partner. A binding financial agreement is a statement that details how your property is divided. Obtaining specialist advice and legal help from a family lawyer can help ensure the validity and accuracy of the document.

The court may issue an enforceable consent order or court order which will be fair and reasonable based on your circumstances.

Summary

A de facto relationship is a couple not legally married but has the same rights as a married couple. The couple can be a different gender or same sex couples.

Three claims can be made when dealing with a de facto property settlement, dividing property, maintenance and superannuation. In Australia, under Family Law legislation, the rights and entitlements concerning the distribution of property are the same as that of a married couple, and similar rules apply if specific criteria are met. The relationship must have been for at least two years, there must be a child from the relationship, or a claim for property settlement can not be made in court.

The application for settlement in court must be made within two years after separation.

Understanding legal rights and discussing matters with an experienced lawyer will ensure that you receive the correct entitlements.

FAQs

1. How is Property Settlement Determined?

Answer: Under the Family Law Act, there are three claims that de facto couples can make when dealing with a property settlement, dividing property, maintenance and superannuation. The application for spousal maintenance and property settlement can be made in the federal circuit court or family court. A property adjustment will be made depending on what each party brought to the relationship and their circumstances. The contributions from each party will be determined. They can include financial contributions, non financial contributions or parental contributions. The court will consider the needs of both parties in the future, and from there, they will determine how their de facto property is to be divided, using the legislative framework as a guide.

2. What Rights do de Facto Partners Have?

Answer: In Australia, under the Family Law Act, the rights and entitlements concerning the distribution of property are the same as that of a married couple, and similar rules apply. In Australia, under Federal law, same sex couples are included in the definition of de facto.

One of these conditions must be met:

  • The relationship should have been a minimum of two years
  • There is a child from the relationship
  • Financial or parental contributions were made to the relationship
  • The de facto relationship was registered under a state or Territory law

3. How Long Do You Have For Property Settlement?

Answer: Under the Family Law Act, de facto couples must apply for settlement within two years after separation. Otherwise, they will need to apply to the court for property orders. For married couples, the limit is 12 months from the date of divorce.

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