If you, or someone you know, has been in a de facto relationship that has subsequently broken down it is important to know what this may mean for you. It is also important to be aware of some of misconceptions people often have about their entitlement or the way in which their matter will be resolved
What should I be thinking about when my de facto relationship ends?
If your de facto relationship has broken down it is important to have a sense as to what you may be entitled to (or need) on a both a short-term basis and longer-term. For example, sometimes our clients have very limited information about their own financial position. This may occur, for example, in a situation where a client has primarily been a homemaker or parent and the other party has been primarily responsible for looking after finances or they keep the financial information separate.
In this scenario it is important to consider what documents may be in existence and what documents you may be entitled to receive so that you can consider your financial position and the financial position of your former partner, which will then allow you to make an informed decision about the approach you wish to take to your matter. This is often a key step in a financial matter and is commonly referred to as the process of exchanging financial disclosure.
There may also be other matters that you will need to consider such as how various expenses will be met until the resolution of your matter. It is often important for this to be considered at an early stage to avoid a situation where expenses are not being met and debts are increasing. Sometimes it may also be important to consider whether you, or your former partner, will be able to meet your financial obligations or whether some form of financial support may be needed, including spousal maintenance or child support.
There are often a number of considerations when it comes to working out what you may be entitled to on a short-term basis and this is one reason why it is crucial to obtain legal advice as soon as possible.
What are some common misconceptions about de facto relationship property settlement entitlements?
One of the biggest misconceptions is that, just because you have been in a de facto relationship that has broken down, there will automatically be a division of property. For example, in a scenario where there has not been any acquisition of property, there are no children of the relationship there has been limited intermingling of your finances, and the duration of the relationship has been short, then a property settlement may not be appropriate.
The first question that we need to consider is:
“Is it just and equitable (or fair) for there to be any division of property at all?”
‘Is my ex entitled to half of my property?’
Again, it is a misconception that just because a de facto relationship has broken down this automatically entitles a former partner to half of everything (or half of the equity in a property), which is not the case.
In my experience, people often come to us after hearing stories about a friend or family member who has been through a similar situation and they automatically assume that this will apply to them. Making decisions based on others’ experience is a pitfall because everyone’s relationship is different,everyone’s financial situation is different.
Another misconception is if there is a trust structure that holds certain assets or property, such as a discretionary family trust, then those assets are automatically exempt from a property settlement. This misconception often arises because sometimes those types of structures are created for asset protection purposes. However if an asset is controlled by one of the parties, for example if they are the Appointor, trustee or have some level of control over a corporate trustee of the trust, then the trust and its assets will generally be included in the asset pool.
One final misconception is that if a property is registered in one person’s name only,then the other person doesn’t have any form of interest in that property. This is not always the case when it comes to a property settlement arising from the breakdown of a de facto relationship. This is why it is important to know how your entitlement and that of your former partner will be determined.
The property settlement process for de facto relationships
As family lawyers we look at any relationship in a global sense and (after considering whether it would be just and equitable for there to be any division of property) there are four key steps in the process:
First we look at the asset pool to identify and value the property, liabilities and superannuation that form part of the property pool. This can include items of property that are owned individually,jointly, or with a third party.
Secondly, we look at contributions. We undertake an assessment of who came in with what in terms of their assets and what each person was doing in terms of employment or study at the beginning of the relationship. We also look at the contributions that have been made throughout the relationship – both financial and non-financial, as well as a homemaker and as a parent. Finally, we look at what contributions have been made following separation.
There is a difference between de facto relationships and marriages in terms of property settlement, in the sense that the time limitation periods in which you have to bring a claim are different. In a de facto relationship, unlike marriages, the time limitation period is two years from the date of final separation. In a marriage the time limitation period is 12 months from the date of a divorce order becoming final (which in some instances may never be made if neither party applies for a divorce)
The third step is to consider what each party’s ‘future needs’ may be moving forwards. Some of the things we look at are:
- How old are they? Are they young or nearing retirement and soon going to be eligible for example, to draw down on their superannuation entitlements?
- Do they have a long working future ahead of them in which they can continue to accumulate savings and assets? Is there any income earning disparity?
- Are there any children?
- Is one person going to predominantly care for them or is it going to be shared?
- If there are children, is there a child with particular needs that requires ongoing medical costs?
- What is everybody’s health like?
- Does either party have medical issues that might impact them going forward?
- If they do, does this affect their ability to generate income?
Based on all of these factors, we provide our client’s with a range of what they may be entitled to in a property settlement. We can usually only provide a range and not a specific percentage or outcome because of the discretionary nature of this area of law.
The final step in the process is to then look back at the property pool and then consider how it may be divided in a way that is just and equitable or ‘fair’.
So while you are now aware of some of the common misconceptions that arise when discussing property settlements for de facto relationships, if you are looking to seek advice about your relationship I recommend you speak to a specialist Family Lawyer, even if only for some initial advice to ensure you are aware of the options available to you, specific to your circumstances.
Phillips Family Law is an award winning Family Law practice serving clients across Australia and abroad. Regardless of where you are in your decision making process, we can make you aware of your options. To discuss your situation confidentially phone +61730079898 or secure a time by clicking here.