Starting a life together in a de facto relationship often means sharing your home, finances, and future plans. It’s an exciting time of building trust and creating a shared vision of a life together. While you’re busy planning for what’s ahead, it’s also worth considering how, and whether you need to, protect your property in a de facto relationship.
Taking steps to safeguard your assets isn’t about planning for failure—it’s about creating peace of mind and clarity. Whether it’s property you brought into the relationship or how you will deal with assets you’ll build together, having a clear agreement in place can help you avoid disputes, reduce stress, and focus on what matters most: your partnership.
Australian Laws and De Facto Relationships
In Australia, de facto relationships are recognised under the Family Law Act 1975 (and Family Court Act 1997 in Western Australia), meaning your partner may have a legal claim to your property if you separate, just like a married couple.
Without clear financial arrangements, you could face:
- Disputes over ownership of property or savings.
- Unintended division of assets you worked hard to build.
- Financial uncertainty or stress during an already emotional time.
By taking proactive steps, such as creating a financial agreement and keeping finances separate, you can reduce the risk of disputes and control what happens to your property.
What Is a De Facto Relationship?
In Australia, a de facto relationship is defined under the Family Law Act 1975 (or Family Court Act 1997 in Western Australia) as a relationship between two people (of any gender) who are:
- not married to each other; and
- not related by family; but
- committed to a shared life on a genuine domestic basis.
You do not have to live together continuously to meet this definition. A combination of factors, such as shared finances, joint property, or a commitment to caring for one another, may also contribute to establishing a de facto relationship.
When Can a Partner Make a Claim on Property?
Once a relationship meets the de facto threshold, your partner can make a claim for property division under the Family Law Act if:
- The relationship lasted at least two years;
- You share a child together;
- Significant financial or non-financial contributions were made by one party; or
- The relationship is registered under state or territory law.
If the Court accepts a claim, it will divide assets based on what is considered “just and equitable,” considering factors such as:
- Contributions (financial and non-financial) made by both partners.
- The future needs of each person, including care responsibilities and earning capacities.
Real World Scenarios
Protecting Pre-De Facto Assets for the Benefit of Children
Suzie and John’s Story
Suzie, 43, and John, 55, have been dating for a while and are planning to move in together. For Suzie, the stakes are high—she was previously married and has two teenage children who live with her full-time. When her marriage ended, Suzie worked hard to buy out her ex-husband’s share of the family home, ensuring her children would always have a stable place to live. Now, with only a small amount left on her mortgage, she’s determined to protect the house for her kids’ future.
John, who has a high-paying job but no property of his own, plans to move into Suzie’s home. While they’re both excited about this next step, Suzie knows that living together could create legal obligations under the Family Law Act, which might affect her house if the relationship doesn’t work out.
Using RP Emery’s Pre De facto Binding Financial Agreement Kit, Suzie and John documented their intentions before moving in together. Their agreement ensures:
- Suzie retains full ownership of her home.
- Her children remain the intended beneficiaries of the property.
- Clear financial boundaries are established to avoid misunderstandings in the future.
With the legalities taken care of, Suzie and John feel confident about starting this new chapter together, knowing they’ve protected what matters most.
Protecting Assets in a De Facto Relationship
Paul and Brian’s Story
Paul and Brian have been in a committed relationship for 18 months and recently decided to move in together. Before they met, both owned their own homes: Brian’s is larger and now serves as their shared residence, while Paul rents out his property. With significant individual assets, they realised the importance of setting clear intentions to protect their financial futures.
Using RP Emery’s Same-Sex Cohabitation Agreement Kit, Paul and Brian created a legally binding document to outline their intentions. The agreement specifies that:
- Each retains ownership of their own property.
- Business assets are not to be shared in the event of separation.
- The original ownership of household items, like furniture and appliances, is clearly documented.
Paul and Brian appreciate that their agreement is flexible—if their circumstances or intentions change over time, they can revisit and update it. And if they ever choose to revoke the agreement, their property matters will then be handled under the Family Law Act 1975.
By taking this step, Paul and Brian have secured clarity and peace of mind, so they can focus on building their life together.
Steps to Protect Your Property
Create a Financial Agreement
A financial agreement is a legally binding document that allows you and your partner to determine how property (assets, liabilities, and finances) will be divided if your relationship ends. This umbrella term covers agreements made before, during, or even after a de facto relationship or marriage.
In the context of de facto relationships, these agreements are sometimes informally referred to as “de facto prenups” or “cohabitation agreements,” particularly when made early in the relationship. While these terms are useful for searchability and familiarity, the correct term in Australian law is Binding Financial Agreement.
Financial agreements can help you:
- Protect assets owned prior to the relationship.
- Define responsibilities for shared debts or joint property.
- Clarify financial arrangements in case of separation, minimising disputes.
The flexibility of financial agreements means they can be tailored to your needs at any stage of your relationship, making them a powerful tool for long-term financial security.
To ensure a financial agreement is enforceable under Australian law, both parties must receive independent legal advice. With RP Emery’s lawyer-approved templates and Legal Review Service, you can create a financial agreement that complies with Australian legal requirements, easily and affordably.
5 Simple steps for putting a BFA in place
Document Ownership of Assets
Maintaining clear documentation of your assets can be critical in proving ownership. Ensure you:
- Keep receipts, title deeds, and bank statements for significant purchases.
- Register personal property, such as vehicles, in your name.
- Record contributions to shared expenses or property, including renovations.
Having this evidence can strengthen your position if a dispute arises.
Ready to protect your property? Use RP Emery’s easy-to-customise templates to safeguard your finances today
Separate Personal and Joint Finances
Although sharing finances can simplify day-to-day expenses, it’s wise to maintain clear boundaries between personal and joint assets:
- Use individual bank accounts for personal income and savings.
- Clearly define contributions to joint accounts for shared expenses.
- Avoid merging large investments unless there’s a clear Binding Financial Agreement on ownership.
Whilst many people might think that if they just keep all their finances separate then they can avoid property division, this is a fallacy. Even if you can demonstrate that you have kept your finances totally separate, the property pool is subject to division by the court in a relationship of sufficient duration. The best tool for providing financial certainty in a de facto relationship is a financial agreement.
Update Your Will and Beneficiaries
A de facto relationship can affect how your estate is distributed, so it’s essential to:
- Review and update your will to reflect your current wishes.
- Ensure superannuation and insurance beneficiaries align with your intentions.
Without a valid will, your assets may be distributed under intestacy laws, which may not reflect your preferences.
Why Taking Action Matters
Protecting your property isn’t just about safeguarding assets; it’s about peace of mind. A proactive approach to financial arrangements provides clarity and fairness, reducing stress and the risk of disputes.
By formalising these arrangements, you can focus on building a secure and trusting relationship without the uncertainty of “what ifs.”
FAQs About De Facto Property and Financial Agreements
Q: Can a financial agreement protect property I owned before the relationship?
Yes, financial agreements are designed to protect assets acquired before and during the relationship. They provide clarity about ownership and division.
Q: Do I need a lawyer to create a financial agreement?
While you don’t need a lawyer to draft the agreement, independent legal advice is essential for both parties before signing. This step ensures the agreement is legally binding and that both of you fully understand your rights, obligations, and the agreement’s implications. RP Emery’s de facto financial agreement kits include everything you need to create a professional agreement, including access to Fixed Price Legal Review Service so your agreement complies with the law.
Q: What happens if we separate without a financial agreement?
Without an agreement, the Family Court may decide how assets are divided based on contributions and future needs. This process can be costly and time-consuming.
Q: Can a partner make a claim even if they didn’t contribute financially?
Yes, non-financial contributions, such as caring for children or home maintenance, are considered by the Court when dividing assets.
Q: Is there a time limit for making property claims?
Yes, claims must generally be made within two years of the relationship ending. After this period, the ability to seek property division may be limited.
Q. How do I talk to my partner about a financial agreement?
Whilst it’s true that talking about finances is not romantic it is essential for building trust and security. Our article How to talk to your partner about a Cohabitation Agreement can help.