Deemed de factos and de facto property entitlements: a little word of warning …
The modern approach to relationships finds many couples co-habiting long before considering marriage. However, you could be in a de facto relationship without even realising it – and, if so, your personal assets are at serious risk in the event that you and your de facto part ways.
The Federal Government now has jurisdiction over de facto relationships pursuant to the Family Law Act 1975 (Cth) (“the FLA”).
Deemed de factos
Under the FLA, as soon as a couple lives together on a genuine domestic basis they are deemed to be de facto partners provided that they are not related by family and not married to each other. However, the relationship must meet certain criteria if, in the event of a break up, one or both of the de factos want to make a property or maintenance claim.
A couple needs to live together for 2 years (or periods totalling 2 years) to be deemed as de facto partners for the purposes of property entitlements in the event of a relationship breakdown. The FLA does not expressly disallow a long lapse between the periods of living together for the purposes of the 2 year aggregate, but this is a factor that will be taken into account by the court in deciding whether to make orders and what orders are appropriate.
If a couple lives together on a genuine domestic basis and has a child, they are immediately considered a de facto couple for the purposes of the FLA and have immediate property entitlements.
There is no discrimination between heterosexual and homosexual relationships under these provisions of the FLA.
Some issues to be aware of – Centrelink and Income Tax Returns
Centrelink considers a couple to be in a de facto relationship from the time they start living together as a couple. It is important to keep this in mind when accepting or applying for Centrelink benefits as it may affect your entitlements.
The Australian Tax Office does not have a fixed timeframe for deeming a couple to be de facto – a couple can access tax benefits (such as offsets) as soon as they start living together as a couple.
The FLA allows a court to also make orders in relation to superannuation interests if a claim is made by a de facto partner after the breakdown of the de facto relationship. This is an important power for the courts to have because many people hold a significant portion of their assets in superannuation.
However, the FLA provides a mechanism by which de facto partners (or people contemplating entering into a de facto relationship) can prospectively contract out of a court order in relation to superannuation interests in a Binding Financial Agreement. This is discussed further below.
Binding Financial Agreements
Binding Financial Agreements (or, as they are more commonly known, “pre-nups”) are largely used before a couple become married, but they can also be entered into by de facto partners or people contemplating living together as a couple.
These Agreements are a legally enforceable way to safeguard the assets that you have when entering a relationship. However, the Agreements must comply with the various requirements in the FLA in order to withstand a challenge by an ex-partner, and we strongly recommend that both partners seek comprehensive legal advice before signing on the dotted line.
It is important to be aware that most Binding Financial Agreements will cease to have effect if you later marry your de facto partner, so it is worthwhile to re-assess the situation and seek new advice if you are planning to marry your de factor partner.
If you would like some advice about the legal impacts of your personal relationship, call us on 1300 654 590. If our lawyers are busy and cannot take your call immediately, we promise to call you back well within 24 hours. Alternatively, send us an email at email@example.com.
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