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Property Settlement - De Facto Relationship

What happens to property owned when people are de facto?

What is a De Facto Relationship?

A de facto relationship can exist between two persons of different sexes. A de facto relationship can exist between two persons of the same sex. A person can be in a de facto relationship even though they are legally married to someone else or they are in a de facto relationship with another person.

What's the significance of 1 March 2009?

For people in de facto relationships the date of separation is very important because it determines which Act applies.

  • If you separated on or after 1 March 2009 then the Family Law Act applies.
  • If you separated before 1 March 2009 then the Property (Relationships) Act applies.

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Agreements

If your relationship breaks down, you may be able to sort out what to do with the property of the relationship in a friendly way with your partner.

Alternatively, you may need assistance to reach agreement. Your solicitor may help you negotiate a settlement with your spouse. Often mediation can help. At mediation you are assisted by an independent person to reach agreement about the division of your property.

If a settlement is reached it should be formalised. That can be done by Consent Orders made by the appropriate Court or by a formal Agreement (Termination Agreement if separation prior to 1 March 2009 and Financial Agreement if separation on or after 1 March 2009). Consent Orders and formal Agreements provide finality so that neither party can make a future claim. They also provide exemption from stamp duty for assets transferred pursuant to the Order or Agreement.

In fact, people can enter into a Financial Agreement before they enter into a de facto relationship or during the de facto relationship (while they are happily together). Such agreements provide for what happens regarding division of property should they separate. These agreements are binding (provided that they meet the conditions set out in the Family Law Act).

When does the matter go to Court?

If agreement can’t be reached then the matter will go to court.

If you separated before 1 March 2009 then your case will be heard in one of the Local Court, District Court or Supreme Court (unless both parties agree to it being heard in the Family Court or Federal Magistrates Court).

If you separated on or after 1 March 2009 then your case will be heard in the Family Court or Federal Magistrates Court.

Whichever Act is relevant, a court will normally only make a property settlement order if the de facto relationship has lasted for two years or more. There are exceptions e.g. if there is a child of the relationship. Also, regardless of which Act is relevant, court proceedings need to be commenced within two years of the date of separation. Outside of this period special leave needs to be obtained from the court to proceed with the case.

Dividing Property - separation on or after 1 March 2009

The law sets out four steps in determining an appropriate division of property. Those steps are:

  1. Valuing the property, including superannuation. The law allows the “splitting” of superannuation interests.
  2. Assessing the contributions made by each party. Examples of contributions are: earning money during the relationship, inheriting an asset, homemaking duties and looking after children.
  3. Assessing the future needs of each party and the resources of each party. For example, if one person has the major responsibility for caring for the children, then they will receive an adjustment in their favour.
  4. The outcome must be “just and equitable”.

Property Settlement Lawyer De Facto

Dividing Property - Separation before 1 March 2009

If you separated before 1 March 2009 then steps 1, 2 and 4, outlined in “Dividing Property - Separation on or after 1 March 2009” apply. Little consideration is given to Step 3. So, for example, the arrangement for the care of the children will have much less relevance if you separated before 1 March 2009.

Also, if you separated before 1 March 2009, superannuation cannot be split (unless both parties consent to the matter being dealt with under the Family Law Act by the Family Court or Federal Magistrates Court). It is, however, still taken into account in dividing up the other property.

Spousal Maintenance

If you separated on or after 1 March 2009 then to be eligible for spousal maintenance you need to show:

  1. That you are unable to adequately support yourself eg. because of caring for children under 18 years of age;
  2. That your spouse is reasonably able to pay maintenance.

You must apply for spousal maintenance within 2 years of separation (if you are late you have to get permission from the Court to commence your case).

If you separated before 1 March 2009 spousal maintenance can be obtained, but on a more restricted basis.


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Back > Family Law & De Facto Law

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