25 Jun 2015
As a family lawyer, I often hear people make comments such as “I am not a de facto, you have to be living together for two years before that happens” or “She moved in, so now she is a de facto and can take me for half my house” or “The rules for gay people are different” or (and this one is my favourite) “All my money is in a trust so even if I am found to be a de facto, he can’t get anything”.
Unfortunately for those who were reassured by those comments, they are in fact all incorrect. The law surrounding de facto relationships changed some time ago, however, many people are not aware of the change.
The definition of a de facto relationship is contained within the Family Law Act, which is a piece of legislation that covers not only NSW but the whole of Australia (excluding WA). The definition covers both same sex and heterosexual couples.
Unfortunately, the law is not as clear cut as it used to be. There are now a list of factors the Court takes into consideration when determining whether a couple are ‘de facto’.
The circumstances that are taken into consideration include but are not limited to:
1. The duration of the relationship;
2. Whether the parties share a common residence;
3. Whether there exists a sexual relationship between the parties;
4. How financially dependent the parties are on each other, or how dependent one person is on the other;
5. Whether the parties have obtained joint assets including joint real estate;
6. If there are children of the relationship and if so how those children are cared for; and
7. If the relationship is public and whether the parties have informed family and friends of their relationship.
The Court is required to weigh up these circumstances to determine whether a de facto relationship exists. The answer is not always simple.
If a relationship does break down and there is a question raised about whether a de facto relationship exists, one thing is certain – it will be an expensive process to ask the Court to determine whether such a relationship exists.
It is possible to avoid the huge cost (both financial and emotional) of fighting over whether a de facto relationship exists, and if it does, how the parties’ property is to be divided. This is by entering into what is called a Binding Financial Agreement or a ‘BFA’.
This is a contract between two parties in a relationship that sets out the assets of the parties and makes a determination of how those assets are to be divided in the event of a breakdown of the relationship.
BFAs are broad and can include as much or as little as the parties want. They are complex legal instruments and each party must have independent legal advice for these agreements to be binding.
One of the greatest benefits of having a BFA is that the division of the parties’ assets is known at the time of separation. There is no need for further argument and huge legal fees to argue about who should get what in the split, or whether one party is entitled to anything.
It is worth, at the commencement of any relationship, to consider the protections you have in place for your investments and to discuss what protections may or may not be available to you.
Legal protections such as BFAs and also comprehensive estate planning can provide peace of mind and save you a significant amount of legal expense later down the track.
Just as you see your Financial Adviser who specialises in your investment strategy, you should consider speaking with a Solicitor who practices in Family Law to discuss the benefits of a BFA. Please contact your Financial Adviser if you’d like to discuss this further or make an appointment.
This article is written by Amy Jenkins, Head of the Family Law Team at Aitken Lawyers. Amy has a wealth of knowledge and experience in BFAs and will be able to assist you with any questions you may have. She works closely with Andrew Aitken, Director of Aitken Lawyers, who has been helping individuals and families with the protection of comprehensive estate planning for many years. Together they will be able to ensure you have the greatest protection available.
Please be aware that this information is not legal advice. We recommend that you seek legal advice prior to making any decisions about this information.