De facto Property Settlements
If you have a financial agreement
If you both have a financial arrangement in place when your relationship ends, you must stick with what you have agreed to with regards to how your property and financial resources are to be distributed.
As these types of agreements are binding, it is difficult, although not impossible, to change or overturn them. There are some exceptions to this which include where the financial agreement wasn’t made with your full cooperation or where the court finds (after you have made an application to it) that the financial agreement isn’t fair and equitable.
The full list of exceptions are mentioned HERE.
You can make a financial agreement at any time during your relationship, even when it is coming to an end.
Having a financial agreement that you both agree on is helpful as it can speed up the finalising of your property and financial settlement, and also keep the matter from going to court.
Here’s a great video from our friends at Legal Aid:
When you don’t have a financial agreement
If you haven’t made a financial agreement or you don’t think you’ll be able to work out one, you can make an application to the court for a property settlement. (You would both normally do this with the help of your lawyers.)
When seeking a decision from the court, the date of your separation is important. You must lodge your application for a property settlement with the court no more than two years from the date of your separation. After this time you need the court’s permission to apply.
It is also an important date because the court can assess the assets, liabilities and financial resources as at that date.
On this point about the end date…
♦ If you have a registered relationship and you have made application to end it, once the 90 day cooling off period is over, the Registrar will officially revoke your relationship.
♦ If you haven’t got a registered relationship don’t worry, but it is advisable that you keep a clear record of the date of separation even if it is by way of email, SMS or even a social media post. And when you make a statement this way keep it very matter of fact as nasty comments can later be submitted to a court particularly when parenting issues are being worked out. Alternately, you could simply advise a lawyer.
What happens if we go to court?
You can generally make a claim for the court to divide property within two years of the relationship breaking down, and sometimes you can even bring a claim if more than two years have passed.
Before the court can determine your financial dispute, you must satisfy the court of all of the following:
◊ You were in a genuine de facto relationship (either registered or not) with your former partner, which has broken down
◊ You meet ONE of the following four criteria:
• That the period for the de facto relationship is at least 2 years
• That there is a child in the de facto relationship
• That the relationship is or was registered under a prescribed law of a State or Territory
• You’ve made substantial financial or personal contributions which you won’t be adequately compensated for unless the court makes an order.
◊ You have a geographical connection to the court handling the matter. This means that it’s important (but not essential) that the court be in the State you currently live in, or where your relationship was based.
◊ Your relationship broke down after 1 March 2009 (or after 1 July 2010 if you have a geographical connection to South Australia only); although in some cases you might be able to apply to the courts if your relationship broke down prior to these dates.
Double check with a lawyer as to whether you fit these criteria before applying to the court.
When a court divides property it takes into account both people’s financial and non-financial contributions to the relationship.
And by non-financial I mean it will look at how you divided up household chores, property maintenance and even the contributions you’ve made as parents.
For de facto couples in particular, it will also take into account the amount of money both you and your former partner earned and will consider any differences in your future earning capacity AND your obligations to care for the children.
Take a look at the fact sheet from Relationships Australia, When De facto Relationships Breakdown, which provides more information about whether you are eligible to make an application for financial matters in the Family Court or Federal Circuit Court.
And what can the court do?
The Family Law Court or Federal Circuit Court can order a division of any property that you both own, either separately or together with each other. This includes superannuation (see the section underneath about super splitting) and spouse maintenance.
What about my superannuation?
It never fails to surprise me how many people believe that their super is theirs alone and can never be touched even when divorce or the end of a relationship is near. However, when it comes to property settlements, it’s about getting an equitable division of ALL the assets. In a nutshell, everything is on the table.
When it comes to super you do have the option of sorting out how the division or ‘split’ of your super should occur. Couples who have separated are able to make an agreement – known as a superannuation agreement – about how any superannuation that either party will receive is to be split.
(WA is exception here, with de facto couples in Western Australia not being subject to the superannuation splitting laws.)
By the way, if you don’t get legal advice the super agreement won’t be binding on the trustee of the superannuation fund.
You can both make a superannuation agreement either before or during your de facto relationship, which states how any superannuation will be split on the relationship breakdown. Because superannuation is different to other property, there are special rules about what a superannuation agreement must say. Provided that a superannuation agreement complies with the legal requirements detailed in the superannuation splitting laws, the agreement is binding.
And when it is binding, the trustee of a superannuation fund must by law implement your agreement. And binding also means the court is not able to make any orders about superannuation.
Here’s a helpful superannuation info kit provided by the Family Court.
What does my payment splitting agreement have to say?
The payment splitting agreement has to say how the superannuation interest is to be split in order for it to operate effectively. Generally, a payment splitting agreement must specify:
• An amount- known as the ‘base amount’.
• A method for calculating the base amount, or a percentage that is to apply to all splittable payments made in respect of the superannuation interest.
(And your entitlement under any payment splitting agreement depends on what the agreement says.)
What if we can’t agree on super splitting?
If despite all opportunities to negotiate both between yourselves and your lawyers you are both unable to agree, then the court is able to make an order about super as part of any property settlement order. This will state how any superannuation is to be split and that order is binding on the trustee of a superannuation fund who must comply with it.
Take a look at what the court considers when it has to make an order because you can’t agree on super (and other property matters).
Pets can often enter the negotiation when property arrangements are being worked through. It is possible to organise formal custody agreements and/or visitation rights so time spent with Fido or Miss Whiskers is fairly divided. It is best to draft an agreement between yourselves as these matters are seldom heard in what are already congested family courts.
If you are having difficulty coming to an agreement then it is best to sit down with your lawyers and get them to help work out something that is mutually acceptable.
Finally, you should also advise all relevant government agencies of any separation as this could be relevant to social security and child support purposes.