De facto Property settlement
It’s that word that many couples are aware of and may even start referring to themselves as, but are never really sure what it means.
At what point does your relationship become de facto?
Well legally, the relationship becomes de facto once you have either been in a relationship for two years, have a child together or made substantial contributions to your partner or to a shared home financially. This sex of the partners isn’t taken into account and so De facto status does apply to same-sex relationships. You are also considered as De facto partners if you register your relationship.
So what does this mean for you?
Well it gives the couple the same rights as a married couple in regards to property distribution. It also means that, just like a married couple, you can enter into a binding financial agreement. So if the worst was to happen and the relationship ended and you had to arrange property settlement it would be similar to that of a divorce. Superannuation can also be a part of this settlement and divided. Settlement can be taken to court where property is divided based on many factors. The court will consider what was owned before and during the De facto relationship and its value, financial and non-financial contributions by both partners and potential future needs. From here the court will decide how property will be divided. Legal representation through this process is advised.
It may be favourable to choose mediation and not litigation
While the courts can decide, the best result is a mutual agreement between the partners. If this is the case, the agreement can be registered with the family courts in the form of Consent Orders. Both partners will need independent legal advice before registering Consent Orders. The consent order is binding once registered and no further changes or requests for property can be made. A Consent Order also makes any property transfers or sales exempt from stamp duty. If a financial agreement has been organised before or during the relationship, it will be binding, as long as it has met formal requirements. Again this agreement will require independent legal advice to both partners. They must be made aware of all advantages and disadvantages of the agreement by counsel. Both partners must sign the agreement for it to be legally binding.
Need help with a De facto settlement or entering into a binding financial agreement? Contact us for advice and information.