de facto relationship property adjustment

Relationship Footprint

Ask yourself this question, are you in a de facto relationship? This is an important question, because being in a de facto relationship has very real implications for any applicant or respondent in a de facto relationship property adjustment. There are also implications in relation to government payments, tax, superannuation and many other areas of the law.

de facto relationship property adjustmentIf you answered “yes” I am in a de facto relationship and happy to share my assets with my partner should the relationship breakdown, read no further. If you answered “I’m not sure we are in a de facto relationship but even if we are I don’t want to share my assets with my partner or be subject to any de facto rights to property if our relationship ends” then this may be worth reading.

In most situations the answer to the question, “are you in a de facto relationship?” is clear. You may be living with your partner in a committed relationship. You both may agree that you are in a de facto relationship. You both may agree that each of you has de facto rights to property.

Sometimes the answer isn’t as clear. What if you & your partner have separate houses, but spend three or four nights a week together in the one home? What if you live together but you keep your finances completely separate? What if you live together but don’t have a sexual relationship? What if no one knows you are a couple? What if you or your partner is claiming social security as a single person? You could still be found to be in a de facto relationship in any of these circumstances.

When we talk about a “relationship footprint” we are referring to the visibility of your relationship to family and friends, your partner and the broader community. In the event of a relationship breakdown your relationship footprint becomes important as it can be used to either prove you were in a de facto relationship or disprove you were in one. Of paramount importance is that you realise this and conduct your relationship in an open & honest manner. For example, if you love your partner & want to be in a relationship but do not wish to be subject to a de facto relationship property adjustment should the relationship end then you can opt out of the Courts jurisdiction & enter into a cohabitation agreement.

If your relationship breaks down & the Court is asked to deicide if you were in a de facto relationship for the purposes of a de facto relationship property adjustment then they will look at the footprint of the relationship.

It doesn’t matter if you are currently in a de facto relationship or if you are thinking about taking that next step with your partner, it is never too late to discuss with your partner the “footprint” of your relationship. This discussion should include:

  • If one or both of you claim social security or government support do you list the other as your de facto partner?
  • Do either of you list the other as your partner on income tax returns.
  • Do you merge your finances as a couple?
  • Does one of you have assets they bought to the relationship?
  • Are you a couple in the eyes of your friends & family?
  • Do either of you list the other as a beneficiary on life insurance?
  • Has either of you made provisions for the other in a Will?
  • Do you share the one address the majority of the time?
  • Do you attend each other’s family functions?
  • Does one of you provide significant support to the others children?

Your answers to these questions will establish your relationship “footprint” and highlight how public you are about being in a de facto relationship.

Assume you are in a de facto relationship & are happy to be in one. An option for you and your partner to enter into a Binding Financial Agreement setting out what will happen to property and superannuation you own if you separate and also dealing with partner maintenance.

Cohabitation agreements need to be drafted with care to ensure that they comply with the requirements of the Family Law Act, and do what they are intended to do which is to protect both parties. Both parties need to have independent legal advice, and their lawyers need to sign statements to that effect.

Even if you do not take this step, preparing lists of what each of you own (with values) when you commence a relationship, can assist to resolve matters if you separate.

Entering into a new relationship is a significant transition period, it may be a good idea to review your Will, Power of Attorney and nominated superannuation and insurance beneficiaries on forming a relationship, and at regular intervals thereafter.

Keep in mind that if you are wanting to limit the footprint of your relationship in order to avoid the courts jurisdiction should your relationship end & your partner was to make a claim against you, you would avoid merging finances, buying property, listing your partner on government benefits claimed & tax returns, being seen as a committed couple by family & friends, listing your partner as a beneficiary on life insurance, superannuation or in a Will, listing the same address on third party forms or financially supporting your partner.

A simpler approach might be to have a full & frank discussion with your partner and share your concerns. Their response may surprise you. Entering into a cohabitation agreement can help you both clearly define what happens to assets of the relationship should it breakdown.

de facto relationship property adjustmentI lived with my ex girlfriend for 3 years. We started out as flat mates & kind of fell into a relationship. We broke up pretty much on the 3 year mark & she started a de facto relationship property adjustment against me. I was pretty confident at the start as I took legal advice & my lawyer was saying she wont even be able to prove the de facto relationship in order to have any de facto rights to property.

 I couldn’t have been more wrong. It turned out that she had documented nearly every stage of our relationship with pictures, emails, letters etc. She listed me on her tax return & social security payments. It was full on! I felt blindsided to be honest.

My parents had passed in an accident & I had received an inheritance. We were still in a relationship at the time & I felt she was taking these steps just to get some of my inheritance.

 It dragged on for 2 years & cost me a fortune in legal fees. In the end I paid her a settlement & we both signed a de facto separation agreement.

 My advice to anyone in a relationship is to get a cohabitation agreement set up. This way you list everything you both have & agree what will happen to joint assets if you break up. You do all of this while things are good not after you have broken up! I would never live with someone without an agreement now.

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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