Usually they relate to how bills are to be paid, what happens if they don’t have access to bank accounts and whether they will be able to afford the additional expenses that come with separating households.
Then, more specifically,
- Will my ex partner be entitled to half of my assets?
- What is involved in the de facto property settlement process?
- What’s true and what’s false about de facto relationship break up entitlements?
While these questions are answered here, it is easy to be overwhelmed and forget what to focus on right now. So, we’ll start with what to focus on first, and then explore the next steps.
What To Focus On When A 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 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. This is often a key step in a financial settlement negotiation 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 Can A De Facto Claim? De Facto Relationship Break Up Entitlements
In Australia there is a difference between de facto relationships and marriages in terms of a 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, 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 ever applies for a divorce).
The De Facto Property Settlement Process
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, they are:
- Examining and identifying the asset pool
- Considering the contributions
- Looking at each person’s future needs
- Returning to the asset pool and considering what would be fair and equitable.
This is referred to as the Financial Settlement process or the Property Settlement process.
Examining The Asset Pool
This involves identifying the value of the property, and any liabilities or superannuation that form part of the property pool. This can include items of property that are owned individually, jointly, or with a third party.
Considering Individual 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, such as carer, homemaker and as a parent. Finally, we look at what contributions have been made following separation.
Identifying Future Needs
This step involves considering the potential future factors that could determine the financial needs of each person, including the needs of any children in the relationship. Some of the factors for consideration include:
- How old is each person? 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 under the age of 18?
- Is one person going to predominantly care for the children or will child care 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 person have medical issues that might impact them going forward?
- If there are medical issues, does this affect the person’s ability to generate income?
Based on all of these factors, we provide our clients with a range of what they may be entitled to in a de facto 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.
Returning To The Asset Pool And Considering What Would Be Fair And Equitable
The final step in the process is to then look back at the property pool and then consider the best composition of how it may be divided in a way that is just and equitable or ‘fair’. This usual involves considering what mix of assets and superannuation each person is to keep as part of their settlement.
Misconceptions About De Facto Relationship Break Up Entitlements
One of the biggest misconceptions when it comes to the breakdown of a de facto relationship is that there will automatically be a division of property, that can be money, real estate and other assets. The first question that needs to be asked when considering whether division of property is appropriate or not, is:
Is it just and equitable (fair) for there to be any division of property at all?
As an example, in a scenario where there has not been any acquisition of property, there are no children from the relationship and there has been limited intermingling of fiances, and the duration of the relationship has been short, then it is possible that a property settlement may not be appropriate.
Other common misconceptions people come to us with, when their de facto relationship breaks down include:
- My ex will be entitled to half of everything
- Trust assets are automatically exempt from a property settlement when a de facto relationship breaks down
- A property in only one person’s name means the other person has no interest in that property.
These common misconceptions often come from word of mouth or from well meaning friends and family who share stories from their own de facto or marital breakdown experiences. While the support of family or friends who have been through a separation can be of great benefit, what is important to remember is that what happened in their case does not necessarily reflect what will happen in yours. Every situation and financial circumstance is unique, and no matter how similar the situation may seem, it is always advised to get legal advice early in order to understand your unique situation, what your specific de facto relationship break up entitlements are and what you should do to protect yourself and your assets.
When considering the property settlement process for a de facto relationship break down, the law will consider a range of factors including the needs of each person as well as any children involved, amongst other practical and legal factors such as:
- The history of shared accounts and property
- Length of the relationship
- If there is a history of domestic violence
- Business partners and investors
We frequently are asked “what can a de facto claim?” And this is a fair question, but it is not the same answer for all situations. Once the factors above, amongst others have been considered, there is a property settlement process that will be followed. Below you can read the legal steps involved in the division of property at the end of a de facto relationship.
Written by Fiona Caulley
Accredited Family Law Specialist
Director
Related Information
- Ending De Facto Relationships: How to End a de Facto Relationship Positively
- What Is A De Facto Relationship? Classification, Obligations & Entitlements
- How to Financially Separate From a Spouse or Partner
- What is Financial Disclosure in Separation & Divorce – How Can I Manage It?
- Separation Checklist: Pre and Post Separation Recommendations to Secure Private and Confidential Information
- What Is the Best Way to Separate From Your Spouse or Partner? How to End a Marriage or De Facto Relationship Well.
Additional De Facto Relationship Resources, Prenuptial & Financial Agreement Resources, Same Sex Relationships Information
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