De facto couples often wonder about the legal time limits that apply to their relationship, in particular those associated with making an application to the Court for a property settlement order.
Can my ex-partner (de facto) apply to the Court for a share of my property?
A de facto partner can make a claim on the court only if the relationship lasted for a minimum of 2 years but it need not be a continuous 2 year period.
It is important to note that de facto couples in Australia, do share the same rights as married couples under the law.
However, there is no automatic right to a share in property held by the other party. Rather, the Family Law Act gives each party the right to apply to the Court, in order for the court to assess the matter and decide whether to divide property or other assets.
The Court will make a decision and hand down Orders, which may entail a division of property between the parties, spousal maintenance, or orders with relation to parenting issues such as custody.
An application to the Court can only be made by a de facto partner, if relationship lasted for a minimum of 2 years and this does not have to be a continuous 2 year period.
Exceptions
Some exceptions do apply to the minimum two year period. A party may apply if the relationship was for less than two years if:-
- there is a child of the relationship (s 90SB(b));
- the de facto relationship is, or was, registered (s 90SB(b));
- substantial payments or contributions were made by one person to the other, and it would be unfair if a property order was not made that takes into account those contributions (s 90SB(b)). For example, if you financially contributed to the purchase of property, or paid for substantial renovations to an already owned property in the other parties name, it would be unfair if you could not recoup those funds from the asset pool.
In such cases, an application can be made to the Court for property, maintenance or parenting orders, provided the necessary mediation and counselling requirements are first met. That is, each party must show they have made a genuine effort to reach their own private agreement before initiating court proceedings.
Application to the court should be a last resort by a couple who is unable to finalise their financial affairs between themselves first.
Children’s matters
The two year time period that applies to financial matters, does not apply in respect to children’s issues.
A parent may apply to the Court in relation to children’s matters at any time. However, ideally parents should attempt to reach their own agreement with regards to issues relating to their children, again, using the court as a last resort if agreement cannot be reached, or if there are complicating matters such as family violence involved.
Children’s matters should always be resolved with the best interests of the child as the foremost consideration.
If the parties can reach their own agreement
Under the Australian Family Law system, a financial agreement is a way that couples can formalise their affairs where they are able to come to their own private arrangement between themselves, rather than having the court decide for them.
When making a Financial Agreement, each party will relinquish their rights to apply to the Court and make a claim on the assets of the other.
Binding financial agreements
There are no time limits imposed on de facto couples as to when they may enter into a Financial Agreement.
The Family Law Act encourages couples to make their own decisions as to their property and finances, and envisages private agreement between couples (or at least genuine attempts by the couple to reach their own agreement) before recourse is had to the Courts as a last resort to finalise outstanding issues or disputes.
When can we make a financial agreement?
Parties to a de facto relationship are able to enter into a financial agreement at any point of their relationship, particularly:-
- A couple can make a financial agreement before moving in together, to cement at the outset of their relationship how they agree that their assets will be dealt, particularly in the event that the relationship should break down at a future point;
- A couple can make a financial agreement anytime during the course of their relationship; or
- A couple can make a financial agreement following separation, to formalise their own private agreement with regards to how the assets and liabilities will be dealt with.
A financial agreement made after separation, is generally referred to as a Separation Financial Agreement.
Separation Financial Agreements are available to all de facto couples, regardless of how long the relationship lasted. That is: you don’t need to have been in a relationship for at least 2 years in order to make a Separation Financial Agreement after the breakdown of the relationship.
What are the benefits of a financial agreement?
There are many benefits associated with using a financial agreement, including:-
- control over how your assets and liabilities are dealt with, rather than the possibility of having the court make these decisions for you;
- access to stamp duty exemptions and Capital Gains Tax (CGT) rollover relief for property transactions that are made in accordance with your Financial Agreement;
- allowing you to “split” your superannuation or transfer superannuation from one party to the other;
- to formalise your property and financial affairs in a method recognised by the Family Law Act.
What can you include in your Financial Agreement?
A Financial Agreement can deal with:-
- how property or financial resources are to be dealt with; and
- whether or not a party is to pay maintenance to the other, and if so, how much; and
- incidental or ancillary matters.
Parenting and children’s issues
If you are able to discuss and agree upon parenting and children’s issues with your partner or ex-partner, you can use a Parenting Plan. For more information about Parenting Plans, see here.