de facto property settlement

Assessing The Damage

Ending a de facto relationship can be extremely difficult for lots of reasons. In the lead up to a relationship ending or at the beginning of the separation people often start to consider their de facto property settlement rights.

de facto property settlementIrrespective of what stage you are at it is important that you assess your situation and take legal advice on your rights & obligations.

In a de facto relationship breakdown all property that you entered the relationship with & acquired during the de facto relationship will need to pooled & split between you. When referencing property of the relationship we are referring to: your home, any land you have purchased, superannuation benefits, any businesses you run separately or together, cash at bank, trust deeds, vehicles, motor homes, boats, bank accounts, gifts and inheritances, lottery wins, any compensation payouts, life insurance as well as furniture and household items.

A de facto property settlement may also include property owned by either of you prior to the relationship, property purchased by both of you or one of you during the relationship and any property purchased after separation. It also includes all debts incurred by the separating couple.

Property includes property that is in your name, property in your former partner’s name and property in both your names. It does not matter if all the property is only in one person’s name because the title to property can be changed from one partner to the other to make sure that the property is divided fairly.

Be aware of the time limits that apply to de facto property settlement:

  • If you need the Courts help to resolve your de facto property settlement, time limits apply.
  • For a de facto relationship, you must apply to the Courts within 2 years of separation.
  • If you are applying for spousal maintenance the same 2 year time limit applies.
  • There are circumstances where the Courts will allow you to make a special application outside of these time limits, but you must have exceptional circumstances.

Do the laws apply to my de facto relationship breakdown?

The Family Law Act 1975 covers all separating couples, including married and couples in a de facto relationship. The Act also covers same sex de facto couples.

The time limits for applying to a court for orders for property division do vary for married and de facto couples that are separating.

When can the Courts make a decision about my de facto property settlement?

The first & one of the most important points is this; the Courts must have ‘jurisdiction,’ which is essentially the power to hear the matter and make a decision about the property of the relationship.

Proof of de facto relationship is required by the Courts:

  • That you both resided in a jurisdiction of the Court when your relationship ended (note: WA is a separate jurisdiction); or
  • That you both reside in a participating jurisdiction on the date the application for orders is made; & either:
  • That you lived in this jurisdiction for 30% of your relationship; or
  • In a de facto relationship breakdown the applicant party made substantial contributions to the property or the finances of the relationship or the welfare of the family in a participating jurisdiction.

Proof of de facto relationship can be proven by providing information in an Affidavit. Keep in mind that the respondent can challenge the jurisdiction of the Court (which is essentially the Courts ability to hear the matter) on the basis that you were not on a de facto relationship. If this happens the Court is then forced to decide what is called a threshold matter and determine if it has jurisdiction to hear your matter. In this instance the applicant must prove to the Court that the relationship was a de facto relationship.

The Courts require proof of de facto relationship based on the following criteria:

Courts consider two people to have been in a de facto relationship if:

  • You were together in a loving relationship for a minimum of 2 years; or
  • You have a Child together; or
  • One party to the relationship made substantial contributions to the relationship or property of the relationship; or
  • You registered the de facto relationship under a prescribed law of a State or Territory.

The Court must be satisfied that you were in a de facto relationship, in order to then make decisions about how to divide property of the relationship.

What if we negotiate our own de facto property settlement?

Some de facto couples are able to negotiate their own de facto property settlement. If you are able to do this you essentially have three options:

  • You and your ex partner can enter into an informal agreement.  You wont have to go to Court. Keep in mind that an informal agreement is not legally binding, which means you can’t enforce the agreement should your ex partner break it.
  • You can ask a Court can turn your informal agreement into consent orders. If the Court thinks that the agreement is fair it will make the agreement into orders. The orders then become binding and you can legally enforce them should your ex partner break them.
  • Informal agreements can also be turned a Binding Financial Agreement.

You must take legal advice from an Accredited Family Law Specialist to ensure which approach, informal agreement, consent orders or a binding financial agreement would best suit your circumstances.

What if can’t negotiate our own de facto property settlement?

In this instance two things can happen. You may not be able to negotiate a de facto property settlement with your ex partner. Or you may feel your ex has no legal basis to make a claim on your assets or assets of the relationship.

The Family Law Act requires most separating de facto couples to try to negotiate and come to an agreement. This is usually done through a Court appointed mediator. You will need a signed letter from the mediator to allow you to apply to the Court for property orders.

There are circumstances where you will not have to try to negotiate directly with your ex partner in an attempt to negotiate your own de facto property settlement. These include:

  • Family violence has taken place within your relationship;
  • Your ex partner simply refuses to negotiate with you;

Fraud has taken place involving assets of the relationship;

  • There are special circumstances that enable you to make an urgent application, for example, if there is a risk that your partner may sell property without telling you; or
  • The time limit period of 2 years for you to make your application is almost up.

How will the Court value property of the relationship?

The Court looks at each matter based on the fact pertaining to that case. There is no set rule for how assets of a relationship are to be decided. This is why so many couples prefer to agree de facto asset protection by way of a binding financial agreement at the beginning of the relationship and not leave it to a Court to decide.

How does the Court measure contributions both parties made to the relationship?

The Courts will look at both parties contributions to the relationship, both financial & non financial. The Courts will look at contributions made by both parties during the relationship, after the relationship ends and up to the time the de facto property settlement is finalized.

Financial contributions the Court will look at are any money provided by you or or a family member on your behalf that were used to purchase an asset. The courts will also look at initial contributions which is any property either you or your ex partner had prior to the start of your relationship.

Non-financial contributions include any unpaid work carried out by one party for the improvement of a relationship asset or benefit of the relationship. The Courts will look at things like; property maintenance, or work done in a business owned by one partner.

Contributions made as a homemaker are also considered as non-financial contributions. In some cases the contributions may not be seen as equal, such as where the relationship was short or the contributions of one partner were particularly large.

What are future needs & how does the Court consider them?

The Courts will look at a number of factors when considering the future needs of both parties:

  • age and health, including any disabilities;
  • income;
  • ability to earn an income and entitlements to any financial resources;
  • responsibility to support children or others, including how many nights children live with each parent; and
  • whether or not the relationship and your role in it (for example as the primary caregiver) has affected your ability to get a job.

It has to be fair:

Irrespective of whether you negotiate your de facto property settlement together or a Court decides the outcome for you. The concept of “fairness” is important. If you negotiate directly with your ex partner review the settlement you agree on from a fairness perspective. If a Court is ever asked to review your settlement & finds that it is unfair then it will be overturned & the Courts will determine a fair settlement. It is in your interests to make it fair the first time around & consider all circumstances of the relationship and contributions made by both parties.

Remember, the information contained on the site does not constitute legal advice. If you think you need legal advice you should contact an Accredited Family Law Specialist.

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