The most recent Australian census data revealed that one in six Australian adults is living in a de facto or unmarried relationship. With de facto relationships so common, it’s a good idea to know your legal rights and obligations when it comes to a de facto separation – and how it might affect your property and finances.
De facto relationship property rights
Under Australian family law, separating de facto couples are treated the same as splitting married couples in terms of property and financial settlement matters. The important difference is that it’s necessary to prove to a Court that your relationship fits the legal definition of a de facto relationship if you are seeking a de facto property settlement through the Courts.
De facto relationships explained
Although de facto relationships are defined in section 44A of the Family Law Act 1975 (the Act), there is quite a lot of confusion on the subject in the community. In fact, a study reported in the Australian Journal of Family Law in November 2021 found that there is deep uncertainty amongst litigants as to what is actually considered a de facto relationship.
And that’s not surprising, given the vagueness of the law.
The legal definition
The definition in the Act seems straightforward. You are in a de facto relationship with someone if you are not married to them, you are not related to them, and you have a relationship as “a couple living together on a genuine domestic basis”. This applies to couples of the same or opposite sex.
The Courts further specify that you must meet at least one of the “gateway criteria” in order for the de facto provisions of the Act to apply and enable a party to seek a property settlement via the Courts. These criteria are:
- That the period for the de facto relationship is at least 2 years.
- That there is a child of the de facto relationship.
- That the relationship is or was registered under a prescribed law of a State or Territory.
- That a party to the relationship has made such a significant contribution to the assets or financial circumstances of the other that it would result in serious injustice if an order for alteration of property interests was not made.
So far, so good. But what exactly does it mean to be “living together on a genuine domestic basis”? There are many factors that can establish whether or not you were living together on a genuine domestic basis, or in a married-like way.
Factors that can determine de facto status
Any of the following factors can be taken into account by a Court, with none of them being a necessary prerequisite:
- How long you have been together;
- The nature and extent of your common residence;
- The ownership, use and acquisition of property;
- Whether the relationship was sexual in nature;
- The degree of financial interdependence and any arrangements for financial support;
- The care and support of children;
- The degree of a mutual commitment to a shared life; and
- The public aspects of the relationship, such as reputation (that is, the way you present your relationship to others).
Further, under section 44A(4) of the Act, “any matter, as may seem appropriate to the court in the circumstances of the case” can be taken into account too. This gives the Court a very broad discretion indeed in determining de facto status.
Grey areas for de facto relationships
The case law has shown, however, that none of these factors alone is necessarily “proof” of the existence of a de facto relationship. For example, even couples who don’t live together can be considered de facto depending on other factors, such as if they have intermingled their finances.
And research shows that couples who live apart “are a significant modern day relationship form, accounting for 9-10% of the single adult population”. So while people in such couples might believe they do not qualify as de facto and that their assets are therefore protected from a property settlement, that is not necessarily the case.
Even monogamy is not a sufficient indicator of a de facto relationship existing. There have been cases where litigants have argued they were in an open relationship or merely “friends with benefits”. But a Court has disagreed and found enough features of a genuine domestic relationship existed to qualify as legally “de facto”.
You could even be found to be in more than one de facto relationship at the same time. Or, if you are married to someone else, but conducting an extramarital affair you could find that the affair qualifies as a de facto relationship.
As such, it pays to take a hard look at your relationship(s) to understand whether or not a particular partnership meets the legal definition of de facto.
Because the definition of de facto depends entirely on the unique circumstances of each case, and a composite picture of many factors, it’s crucial that you consult with a family lawyer for advice on whether your relationship does in fact most likely qualify as a de facto one.
When you disagree about the nature of the relationship
Often, there are opposing views by members of a couple as to whether they were actually in a de facto relationship, or perhaps merely girlfriend and boyfriend. When this happens, the Courts can intervene to have the final say on whether the couple was de facto and a property settlement can take place.
What it then boils down to is the Court’s assessment of the nature of the relationship and the extent to which two people have merged their lives, with financial, physical and emotional interdependence.
Proving the existence of a de facto relationship
To determine if a genuine de facto relationship existed, the Courts will take a detailed forensic look at all aspects of a couple’s lives. Objective evidence becomes a witness: for instance, data such as public records (tax returns, child support, Centrelink applications and the like), financial statements, email, telephone and SMS records, medical records, even photos shared on social media.
Even the opinions of family and friends can be useful in enabling a Court to draw conclusions about the relationship. The credibility of each party is, as always in the Court system, also vital.
Breakdown of a de facto relationship
When a de facto partnership has come to an end, you can privately come to an agreement with your ex as to how to divide your property, such as by entering into a Binding Financial Agreement or Consent Orders.
Or, if there is disagreement between you and your ex over how to fairly divide property, you can file an application in the Courts for orders specifying how property will be shared.
A de facto property settlement application is made using the same forms and following the same process as separating married couples. The major difference is that you must satisfy the Court that a de facto relationship did exist.
The Court will examine the asset pool as well as the contributions (financial, non-financial, homemaking and parenting) and the future needs of both parties to make orders that are just and equitable.
If you decide to go to Court, you must apply for orders within two years of the end of your relationship (otherwise it’s necessary to seek the Court’s permission to apply).
What “property” is included for de factos?
In family law, “property” means both the assets and liabilities of a couple. It can include anything that was acquired before, during and even after separation and includes property owned jointly or separately.
The “property pool” can comprise real estate (whether lived in or investment properties), motor vehicles and the like, household goods, business investments and shares, cash in bank accounts, interests in partnerships, trust assets as well as all kinds of debt.
Further, under superannuation splitting laws, the super of either party can be shared (even if it cannot be accessed ‘til a later date). Since 2018, de factos in Western Australia are also eligible for super splitting.
De facto separation agreement vs. Court-imposed settlement
As noted above, separating de facto couples can reach agreement on their property division by themselves without the need for Court intervention. This is definitely the preferable option, since litigation is typically far more expensive, more stressful and takes much longer to achieve an outcome.
A Binding Financial Agreement is a legally binding, enforceable contract which details you and your ex’s agreement over how to divide your property and sets out financial arrangements (including any maintenance, which de factos may be entitled to, just as married spouses are).
It creates certainty over the entitlements you each will have when the relationship ends, compared to the complete lack of certainty as to how a Court will resolve your property settlement. You and your ex also have far more control over the details of your negotiated outcome than when a Court imposes orders.
The process for a Court to determine a property settlement is complex and can take a very long time to proceed through the clogged-up Australian family court system. Inevitably, going to Court also means that there is far more potential for ongoing conflict, rather than you each being able to move on with your lives quickly after separation.
It’s important to note that both you and your ex must obtain independent legal advice for a Binding Financial Agreement to be valid and enforceable.
If possible, we advise you to attempt to reach an agreement with your ex rather than seek a Court-ordered property settlement. In the event that there is serious disagreement over how to divide property, we further recommend you explore your Alternative Dispute Resolution options, such as mediation, collaboration and arbitration. We can advise you on which method would be best suited to your situation.
Sometimes, though, it may be impossible to avoid litigation. For example, your ex may staunchly refuse to acknowledge that you were in a de facto relationship and are therefore entitled to a property settlement. On the other hand, you might feel you were not in a de facto relationship and wish to protect your assets from a potential distribution.
Either way, give us a call here at Ryan & Seton Lawyers on 02 4397 1500 so we can go through your circumstances, advise you of your rights and obligations, and generally develop the best strategy for you.