Once the romance subsides, your relationship may not be the fairy tale you once imagined.
Many people who enter into a de facto relationship by moving in together for the first time may not think there are legal consequences from their decision. Even couples who do not live together but have been together for a significant period of time may still be considered to be in a de facto relationship.
While you may not see this as a significant commitment, there can be legal consequences from this decision and it is important that you consider the implications and discuss them with your partner.
If the unfortunate event occurs and your relationship breaks down, you do not want to be left in a position where your assets and financial contributions to the relationship are not fairly considered by a Court. Ultimately, you do not want to lose any money or assets to which you are entitled.
Definition of de facto
Two people are considered to be in a de facto relationship if “they are a couple living together on a genuine domestic basis.
If you are unmarried and living together as a couple, the FLA will recognise your relationship in the same manner as if you were married.
However, even if you are not living together the Court will look to several different factors, such as the length of your relationship, the degree of financial dependence or interdependence, the reputation of the public aspects of the relationship.
Many relationships have many or all of the above elements, you may be in a de facto relationship and not even realise it.
Property Settlement for de facto couples
The recent reforms to the Family Law Act (FLA) enable access to property settlement for most de facto couples in a similar manner to a property settlement for married couples.
This means that one member of the relationship can make a claim to the court within two years of the relationship breaking down.
Binding Financial Agreement (BFA) – a solution to the problem?
A BFA is a contractual agreement between yourself and your partner about how your financial affairs will be arranged in the event that you suffer a break down of your relationship. BFAs also account for maintenance responsibilities, account for household contributions and rights to property.
There are substantial benefits to entering into a BFA. It allows you to make decisions about property ahead of time, to avoid a potentially long and costly legal dispute later on.
BFAs can be entered into before, during or after a de facto relationship has commenced.
What happens if your relationship breaks down without a BFA?
If you do not enter into a BFA prior to the relationship break down you will need to enter into negotiations about the best way to distribute the property from the relationship.
If this cannot be achieved amicably, you may need to involve the Family Law Courts to obtain consent or property orders which is a costly process and does not provide you with any certainty as to the outcome.
A BFA precludes the Court from any involvement in the property or financial aspects of the relationship
We all want our relationships to work but you never know what events are around the corner. It is best to be as prepared as possible in mitigating all financial risk and protecting all assets by entering into a BFA.
A BFA can be a very complex legal document due to the strict statutory requirements that must be met to render it a legally binding instrument. This means that it is essential to obtain legal advice about the best way to draft the agreement.
If you think you are currently in a de facto relationship without a Binding Financial Agreement, please call Matthew Oakley on (02) 6333 4400 for further information on how best to protect your family, your assets and most importantly, yourself.