De Facto Break Up Entitlements
Just like married couples, if you are in a de facto relationship and subsequently break up, you are entitled to make a claim for property settlement and spousal maintenance from your former partner.
The percentage split of the assets of the relationship between the parties will depend entirely on your individual circumstances.
In circumstances where you and your former partner are amicable, you may be able to achieve a just and equitable division of the property pool by way of an Application for Consent Orders to the Federal Circuit and Family Court of Australia.
Alternatively, some couples choose to contract out of the confines of the Court system and settle their matter by way of a Binding Financial Agreement.
What is a De Facto Relationship?
Except for the formalities and registration of a marriage, there is often no difference between the nature and quality of a de facto relationship and a marriage.
Each may involve a high degree of stability and commitment, substantial economic and emotional interdependence, and the provision of care and support for children.
Section 4AA(1) of the Family Law Act 1975 (Cth) (‘the Act’) defines a de facto relationship as one between persons who are not legally married to each other, are not related by family, and having regard to all the circumstances of their relationship, they have a relationship as a couple living together on a genuine domestic basis.
Section 4AA(2) of the Act lists a set of non-exclusive factors or circumstances that assists the Court with defining a de facto relationship:
- the length of the relationship;
- the nature and extent of their common residence;
- whether there was a sexual relationship;
- whether there was financial dependence or interdependence;
- whether there was a mutual commitment to a shared life;
- how you acquired, owned and used property;
- whether the relationship is or was registered under a prescribed law of a State or Territory;
- the care and support of children; and
- the reputation and public aspects of the relationship.
There is often a presumption amongst the legal community that a couple who have a mutual commitment to a shared life, and who have lived together for at least a continuous period of two years, are in a de facto relationship – but this is only a presumption, and not a hard-and-fast rule.
Time Limits & De Facto Break Up Entitlements
It is important to be aware there is a two-year time limit from the date of the de facto couple’s break up to commence legal proceedings in a Court about the division of property (entitlements) of the relationship.
Failing to commence proceedings within the time limit may mean losing your right to claim your de facto break up entitlements and property division.
If the time limit has already expired, you may still be able to make an ‘out of time’ application to the Court.
In these circumstances, you will need to establish that there are either shared assets of significance (e.g., jointly-owned real estate) that ought to be dealt with, or there are other circumstances that mean that you or your former partner will suffer hardship if the Court were not to hear your application.
How Can I Claim My De Facto Break up Entitlements?
Your entitlements to the property of the relationship depend entirely on your individual circumstances.
The ordinary approach to determine the de facto couple’s entitlements and how the property of the relationship will be equitably divided between the parties requires adherence to a specific four-step process, regardless of whether or not Court proceedings are commenced by either party:
1. Establishing the property pool
To establish the property pool, you must identify and value the current assets, liabilities, superannuation and financial resources of you and your former partner.
2. Assess the contributions of each of the parties to the property pool
An assessment of the parties’ contributions examines the contributions of you and your former partner at the time you started living together, both your financial and non-financial contributions, homemaker and household contributions, parenting contributions, the overall period of cohabitation, and any post-separation contributions.
3. Assess any relevant future factors
For example, any disparity between you and your former partner in age, health or ability to earn income.
Such factors may warrant an adjustment in favour of either of you to ensure the distribution of property is just and equitable.
4. Formulate a just and equitable division of property
The final step is to consider the information gathered in the first three steps and to formulate a proposal for the division of property that is appropriately structured to achieve a ‘just and equitable’ outcome.
It is important to realise from the outset that being the higher income earner, or bringing more assets into the relationship, does not guarantee that you will receive a higher percentage distribution of the property pool.
De Facto Maintenance & Financial Support
De facto partners may be entitled to apply for spousal maintenance after their break up under the Act, but only in certain circumstances. Spousal Maintenance is different from an order for property settlement and child support.
A maintenance order is an order for the payment of money, either at regular intervals or in one lump sum, for the support of the person to be maintained, and requires that one party has a shortfall of income as against expenses and that the other party has an excess of income over expenses.
The essential feature is that, unless ordered to be paid in a lump sum, it rises and falls with the need of the person to be maintained and the financial capacity of the person paying the maintenance.
Sections 90SE and 90SF of the Act set out the powers of the Court to make an order for spousal maintenance as a de facto break up entitlement and the matters which the Court must take into consideration concerning maintenance.
Under Section 90SF of the Act, once the parties to a de facto relationship break up, they have the right to receive spousal maintenance from their former partner only if:
- A party cannot financially support themselves based on their reasonable weekly needs because:
- the party has the care of a child of the relationship under 18 years; or
- the party’s age or physical or mental incapacity for paid employment; or
- for any other adequate reason; and
- The former partner can pay spousal maintenance given their income and reasonable weekly needs.
There can be no order for the payment of spousal maintenance unless the party seeking maintenance is unable to support themself adequately.
It is not a level of ‘bare minimum’, but a level that is reasonable in all the circumstances, including the circumstances that the former de facto couple have broken up and that the assets and resources that were available to them both have now been divided between them.
Maintenance support obligations may be altered or end if either party enters into a new relationship that affects their financial standing, marries another person, or passes away.
De Facto Property Settlement
Part VIIIAB of the Act deals with financial matters relating to de facto relationships and it makes provision for two primary options for property settlement available to former de facto couples that have broken up in Australia:
- by Application to the Federal Circuit and Family Court of Australia to alter the property interests of the parties; or
- by Binding Financial Agreement (‘BFA’).
An application to the Court to alter property interests can occur by two means:
- by consent, meaning that the parties are agreed as to how the division of the assets of the relationship is to occur; or
- by Initiating Application, which seeks the Court’s intervention because either the parties are unable to negotiate or compromise on an appropriate division of the assets of the relationship, or one party is failing to engage in meaningful negotiation.
Distinct from an application to the Court, a BFA may be prepared to determine the parties’ property interests either at the commencement or during the relationship, or after the de facto couple has broken up.
BFAs facilitate more flexibility in an agreement for property division and allow the parties to contract out of the Court requirement to reach a just and equitable division.
It is important to note that each party to a BFA must first obtain independent legal advice for the BFA to be binding.
In the absence of a BFA, either or both parties can make an application to the Court to alter property interests under the Act.
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For more information about de facto break up entitlements and property settlement, contact us at Bambrick Legal today. We offer a free, no-obligation 15-min consultation for all enquiries.
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