Should You Be Protecting Your Assets in a De Facto Relationship?

While marriage laws and their potential impact on a couple’s assets are generally well-understood in Australia, there is often confusion regarding what constitutes a de facto relationship and how assets are treated in de facto relationships.

Many people are uncertain as to whether their current relationship would legally be considered de facto, and whether they need to consider protecting assets in a de facto relationship.

Here, we explain how the law defines de facto relationships, and examine legal tools for protecting assets in a de facto relationship.


What is a De Facto Relationship?

What legally constitutes a de facto relationship in Australia is defined by the Family Law Act 1975, which classes two people as being in a de facto relationship if:

  1. The persons are not legally married to each other; and
  2. The persons are not related by family; and
  3. Having regard to all the circumstances of their relationship, they have a relationship as a couple living together on a genuine domestic basis.

This definition applies to both heterosexual and same-sex couples.

The concept of a ‘genuine domestic basis’ is somewhat open to interpretation, and situations often arise where one person contests the nature of a prior relationship and argues to a court that it should not in fact be considered de facto. When a court has to determine whether the relationship was truly de facto, they will consider factors such as:

  • The duration of the relationship (2 years or more is considered de facto)
  • The nature of the couple’s common residence
  • Whether a sexual relationship exists
  • The degree of financial dependence between the couple
  • The existence of any children
  • Public perception of the relationship

A relationship may also be considered by a court to be de facto if you have lived together for less than two years but there is an exceptional circumstance such as a child being born of the relationship.


What Effect Could My De Facto Relationship Have On My Assets?

Being in a de facto relationship has wide-ranging implications regarding how your assets and property may be treated in the event of a relationship breakdown, and can lead to one partner incurring financial obligations upon separation.

This is because if a relationship is legally considered de facto, the courts have the power to order a division of assets between separated parties as they see fit.
Assets which can be divided by a court during the separation of a de facto couple include:

  • Property
  • Cars and boats
  • Superannuation
  • Household and personal items

This means that, similarly to marriages, people in a de facto relationship need to be aware that their valuable assets may be contested upon separation if they do not have adequate legal protection measures in place. Because of this, protecting assets in a de facto relationship should be a priority.

It is important to note that even if your de facto relationship is going well and separation seems unlikely, it is still prudent to legally safeguard your assets ahead of time. An effective asset protection plan can provide you peace of mind by assuring that whatever the future holds for you and your partner, your assets and financial security will be catered for.


How Can I Start Protecting My Assets In a De Facto Relationship?

One of the most effective methods of protecting assets in a de facto relationship is creating a Binding Financial Agreement (BFA) with your partner, which can be entered into at any point during the relationship or even during the process of separation.

A BFA is structured similarly to a prenuptial agreement, and formalises how assets and property are to be divided upon a potential breakdown of the relationship. BFAs can also be used to set out other stipulations including how spousal maintenance or child support will be handled upon separation.

When considering your options regarding a BFA, it is prudent to seek appropriate legal advice to ensure that both parties have provided full financial disclosure and that the agreement is legally airtight. This will minimise the possibility of one partner applying to the court to try and have the agreement set aside after the fact.

It is also important to realise that if you are seeking to make a property or asset claim against a partner you have separated from, you have a time limit of two years following the separation to make the claim.


Need Legal Advice About Protecting Assets in a De Facto Relationship?

If you are considering your options for protecting assets in a de facto relationship or are seeking clarity regarding the status of your current relationship, Pullos Lawyers can help.

Our experienced family lawyers can create agreements that ensure you are stringently protecting assets in a de facto relationship, and can also assist with other issues related to separation including, property settlements overseas, child custody payments, and spousal maintenance payments. To speak to one of our lawyers today, please get in touch via email, or call us in our Gold Coast office on (07) 5526 3646, or in Brisbane on (07) 3144 1641.