In Australia, de facto relationships have legal implications that are similar to those of married couples. This article aims to provide a comprehensive guide to de facto relationships, including the rights and responsibilities of de facto partners, the process of making a financial agreement (sometimes referred to a de facto prenup), and the factors that determine whether a couple is considered de facto under Australian law.
What is a De Facto Relationship?
According to the Family Law Act 1975, a de facto relationship is defined as a relationship between two people who are not married or related by family but have a relationship as a couple, living together on a ‘genuine domestic basis’.
This definition covers both opposite-sex and same-sex relationships. However, it’s important to note that being legally married or related by family excludes a relationship from being considered de facto.
Determining a De Facto Relationship
To determine whether a couple is in a de facto relationship, various factors are taken into account. These factors include the;
- nature and extent of the common residence,
- ownership and acquisition of property,
- existence of a sexual relationship,
- financial dependence or interdependence,
- duration of the relationship,
- mutual commitment to a shared life,
- registration of the relationship,
- care and support of children,
- public aspects of the relationship.
Rights and Entitlements of De Facto Partners
De facto couples in Australia share the same rights as married couples under the law. However, unlike married couples, de facto partners do not have an automatic right to a share in each other’s property. Instead, they can opt for a financial agreement or apply to the court for property settlement, spousal maintenance, and orders related to parenting issues.
To be eligible to apply to the court, a de facto relationship must have lasted for a minimum of 2 years. However, there are exceptions to this requirement. For instance, if there is a child of the relationship, the de facto relationship is registered, or substantial financial contributions have been made by one person to the other, the minimum two-year period may not apply.
It’s important to note that the 2-year time limit does not apply to children’s matters. Parents can apply to the court for parenting orders at any time. However, it is encouraged for parents to attempt to reach their own agreement on parenting issues before resorting to court intervention.
A Financial agreement can be made at any stage of a relationship. If you are entering into a de facto relationship or moving in together, you can consider that a financial agreement, aka cohabitation agreement is very similar to a prenup in it’s function. It sets out what would happen to your property if the relationship breaks down – it is essentially a prenup for unmarried couples.
What is a Prenup?
A prenup (short for prenuptial agreement) is a practical plan for how the assets, debts, and other matters to do with the marriage will be dealt with if the relationship breaks down. This type of financial agreement is made before the couple gets married.
Can you get a prenup without intending to be married? Yes, a prenup for unmarried couples, often known as a cohabitation agreement or more correctly Financial Agreement, serves a similar purpose. It offers peace of mind and settles the “what happens if?” questions.
Making a Financial Agreement
A financial agreement, also known as a de facto agreement or prenup for de facto relationship, allows a couple to settle how their property should be divided in the event of a relationship breakdown. This agreement is akin to a prenup without marriage and provides a level of certainty, helping to avoid court proceedings.
Prenup Before Moving in Together
Couples planning to live together can create a prenup before moving in together, although the correct terminology for such an agreement in Australia is a Binding Financial Agreement. This establishes how assets will be dealt with in the event of a future breakdown, serving a similar purpose to a prenup for de facto couples.
Types of Financial Agreements
There are different types of financial agreements depending on the circumstances of the relationship:
- Cohabitation Agreements Before Living Together: Similar to a prenup before moving in together, couples can establish how their assets will be dealt with.
- Cohabitation Agreements for Heterosexual Couples: These agreements, akin to a de facto prenup, are designed for couples already living together.
- Same-Sex Cohabitation Agreements: Serving as a prenup for de facto same-sex couples, these agreements protect rights and assets.
- Separation Financial Agreements: These agreements can be entered into after the breakdown of a de facto relationship.
Benefits of a Financial Agreement or de facto prenup
Financial agreements offer several benefits for de facto couples, including:
- Control Over Asset Division: Couples can have control over how their assets and liabilities are dealt with, avoiding the unpredictability of court decisions.
- Stamp Duty Exemptions and Tax Relief: Property transactions made in accordance with a financial agreement may be eligible for stamp duty exemptions and Capital Gains Tax (CGT) rollover relief.
- Superannuation Splitting: Financial agreements allow couples to split their superannuation or transfer superannuation from one party to the other.
- Formalising Property and Financial Affairs: Financial agreements provide a legally recognised method to formalise property and financial matters in line with the Family Law Act.
Prenup Meaning and Entering into a Financial Agreement
Understanding the prenup meaning is essential. Parties to a de facto relationship can enter into a financial agreement or prenup for unmarried couples at any point during their relationship. Both parties must receive independent legal advice to ensure enforceability.
Understanding the legalities and rights surrounding de facto relationships and the prenup for de facto in Australia is essential for couples. By clarifying the definition of a de facto relationship, explaining the factors that determine its existence, and exploring the process of making a financial agreement akin to a prenup without marriage, couples can navigate the complexities with confidence.