13-08-09
Catherine Henry Partners Lawyers Newcastle
This fact sheet explains property rights following the break-up of a de facto relationship.
The information in this fact sheet applies to all de facto relationships in NSW, including samesex couples.
What is a de facto relationship?
A de facto relationship is between two people who live together on a ‘genuine domestic basis’ and who are not married or related to each other. De facto relationships can be between same-sex partners or opposite sex partners.
A person living in a de facto relationship may also be married to someone else but not yet divorced.
What happens when my de facto relationship breaks down?
If you have been living in a de facto relationship you may be entitled to a division of property between you and your former de facto partner.
Relationships ending after 1 March 2009 are now covered by the Family Law Act 1975 (Cth) which enables the Federal Magistrates Court, or the Family Law Court to divide any of the property which a couple owns either individually or jointly.
‘Property’ includes superannuation, real estate, shares, personal property and financial resources.
If your relationship ended before 1 March 2009 you can opt into the Family Law Act property regime
provided you both agree.
However, if no agreement is reached, your property will be divided under the de facto laws of your state.
In NSW the De Facto Relationships (Property) Act provides for a division of property between de facto but does not cover superannuation or some other assets.
Similarly, the non-financial contributions of a party who looked after children or otherwise contributed to the welfare of the family are not given the same recognition as under the Family Law Act. Spousal maintenance under the NSW regime is also very limited.
What is a ‘Binding Financial Agreement’?
If you are able to reach an agreement with your former de facto about the way in which your property should be split, you can enter a ‘Binding Financial Agreement’.
You do not need to go to Court, but each party must each obtain independent legal advice
from a solicitor. A solicitor must certify they have advised you about the impact of your agreement on your entitlements.
The advantages of a Binding Financial Agreement include lower costs and a faster resolution than going through the Court system.
Former couples are able to make their own decisions about how their property should be divided. You can enter a Binding Financial Agreement anytime before, during, or after your de facto relationship.
Which de facto relationships are covered?
Under the reforms to the Family Law Act, only certain de facto couples are entitled to obtain a property division.
When deciding whether a property division is appropriate the Court will consider:
- public aspects of the relationship (eg whether it was recognised by friends and family, or whether it was registered)
- length of the relationship and whether it lasted two years or more
- whether there is a child of the relationship
- care and support of children of either party provided within the relationship
- whether there was a sexual relationship
- circumstances of cohabitation
- degree of mutual commitment to shared life
- degree of financial interdependence (eg shared bank accounts, joint mortgage)
- whether one party financially supported the other party
- acquisition, use and ownership of the property of the relationship.
What factors are taken into account when dividing the property?
A four-step process is applied by the Court when making Property Orders:
STEP 1:
Adding up the value of the joint assets and subtracting the joint debts to calculate the net value of the property of the relationship.
STEP 2:
Identifying the financial and non-financial contributions of each party to the acquisition of the joint assets.
STEP 3:
Considering a range of factors such as the financial commitments of either party to support children or other people, the earning capacity, health and age of the parties.
STEP 4:
Considering any other factors which the Court thinks are relevant given the particular circumstances of the parties.
What if one, or both of us have re-partnered?
The new legislation recognises that one or both parties to a de facto relationship may already be married, or that a former de facto may be entitled to a property division even though they (or their former partner) have commenced a new de facto relationship.
This means that a property matter may involve more than one former partner as a party to the proceedings.
At the time of writing, law-makers have left it for Courts to determine the weight given to the claims of competing partners. It remains to be seen exactly how these relationships will be treated in practice.
Time limits?
Generally you must apply to the Court for Property Orders within two years of your relationship ending.
Although there are limited circumstances in which the Court will allow you to apply ‘out of time’ these applications are usually more difficult and complex because of the time that has passed since the parties were living together.
How can we help?
Our family law partner Stephen Rugendyke can assist you with a range of services following the breakdown of your de facto relationship including:
- advice about your rights and options
- negotiating and drafting a Binding Financial Agreement on your behalf
- advising you in relation to a Binding Financial Agreement
- applying to the Court for Property Orders
- applying to the Court for Parenting Orders
- drafting a new Will, Power of Attorney and Power of Enduring Guardian
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