De facto Property Law changes

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On 1 March 2009, the laws* changed in relation to the division of property if a de facto relationship breaks down. The biggest change is that de facto couples will now be treated in the same way that married couples have been for years. De facto property disputes will now be heard in the Family Court and the Federal Magistrates’ Court.

What do the new laws change?

When deciding how assets, debts and superannuation should be divided, the Courts will now look at:

• the contributions each person has made, including building up assets, providing financial support and caring for the family and household; and
• the future needs of each person, including ongoing care of children or others, earning capacity and other financial resources available to them.

Previously with de facto partners, the Court only looked at contributions and ignored future needs. The division of assets between married couples has always looked at both these factors.

Superannuation

The new laws now allow de facto couples to split superannuation entitlements if they separate. Previously, only married couples could split their superannuation. If one de facto partner had more superannuation than the other partner they had to keep their own superannuation and perhaps give the other partner more of the other assets.
De facto couples can now split superannuation by transferring part of one partner’s superannuation entitlements into the other partner’s superannuation fund.  Being able to split superannuation gives de facto couples more flexibility and options when working out a fair property settlement.

Maintenance

A de facto partner may now have to pay maintenance if their partner is unable to adequately support himself or herself.  This used to only apply to married couples. Maintenance may have to be paid if, for example, one person has the care of children under the age of 18 years, or if by reason of age, physical or mental incapacity they cannot undertake appropriate gainful employment. There is no automatic entitlement to maintenance. One person must be unable to adequately support himself or herself and the other must have the capacity to provide support.

This is separate from child support obligations which have always applied equally to married and de facto couples.

Do the new laws apply to you?

A de facto relationship is a relationship where two people are not married but are living together as a couple on a genuine domestic basis. The couple can be of opposite sex or the same sex.

Usually it is obvious whether or not a de facto relationship exists. But sometimes it is not so clear.  The court can decide whether or not a de facto relationship exists. It will look at various factors including the length of the relationship, the degree of financial dependence or independence between the parties, whether a sexual relationship exists, and whether other people consider the couple to be in a de facto relationship.

A person can be in a de facto relationship even if they are already legally married to someone else.  It is also possible for someone to be in more than one de facto relationship at the same time.
 
It is a common but mistaken belief that you need to be in a de facto relationship for 2 years before the laws will apply to you. That is not the case. Your relationship will come under the new laws if it satisfies any of the following:

• You and your partner have been in a de facto relationship for 2 years; or
• There is a child of the de facto relationship; or
• You or your partner has made a substantial financial or non-financial contribution to the assets of the relationship or a substantial contribution as a parent or homemaker, and serious injustice would result to you or your partner if a Court order was not made; or
• You have registered your de facto relationship with one of the State or Territory Relationship Registers.

Can you “contract out” of the new laws?

The new laws allow a de facto couple to sign a financial agreement which specifies how they will divide their assets, liabilities, financial resources and superannuation entitlements if they separate and whether one party will pay maintenance to the other party. The agreement can be signed before the couple enters into a de facto relationship, during the relationship, or after separation. This is the equivalent of a “pre nuptial agreement” for married couples.

Before the agreement can be made, each person must receive independent legal advice about the agreement.

If a de facto couple marries after the agreement is signed, it ceases to have effect.  If you are in a de facto relationship, have signed an agreement, and later decide to marry, you will need to sign a new agreement made in contemplation of marriage.

Need further information or advice?

If you would like further information or advice about your de facto relationship, contact our family law department on 9321 9771 to make an appointment with one of our experienced family lawyers.

At our first meeting with you we will help you understand your legal position and give you options for the future. Even if you do not wish to take any immediate action, you will leave your initial meeting with a better understanding of how the law applies to you and the different pathways you can take to avoid potential disputes in the future or resolve disputes that already exist.  

*The Family Law Amendment (De Facto Financial Matters and Other Measures) Act 2008.  The new laws apply Australia wide, with some exceptions.  For example, if you are living in South Australia or Western Australia the laws may be different. If you separated before 1 March 2009 the new laws will apply only if you and your partner agree for them to apply. If you do not agree for the new laws to apply, we can talk to you about how the old laws affect you.