Couples commonly assume that once they have been in a relationship for two years, they are in a ‘de facto’ relationship. However, de facto relationships have a specific definition under the Family Law Act 1975 (Cth) (the Act), and it’s not always as straightforward as a two year anniversary. Below, we consider how this definition may apply to you and your partner, and what it means in relation to drafting a binding financial agreement.
What Does a ‘De Facto Relationship’ Mean Under the Law?
Section 4AA of the Act defines a de facto relationship as follows:
- the two persons are not legally married to each other (note that a de facto relationship can still exist even if one person is legally married to someone else); and
- the two persons are not related by family; and
- taking into account all the circumstances of their relationship, the two persons have a relationship as a couple “living together on a genuine domestic basis”.
The section further specifies the circumstances that a court may depend on, including:
- duration of the relationship;
- nature and extent of cohabitation;
- existence of a sexual relationship;
- degree of financial dependence;
- ownership of property;
- degree of mutual commitment to each other and a shared life;
- registration of a de facto relationship; and
- any care and support of children.
There are additional requirements if you are in a de facto relationship applying to the court to obtain an order or settlement relating to maintenance and division of assets.
If We Separate, Can I Apply to the Family Court to Settle a Financial Dispute?
If you break up with your partner and were in a de facto relationship, you have the right to apply to the Family Court or Federal Circuit Court to have your financial matters determined and divided in the same way as divorced couples. However, there are additional thresholds to be met before the court can make a declaration set out under section 90SB. In particular, you must have met one of the following criteria:
- your relationship was at least two years long;
- there is a child of your de facto relationship;
- your relationship was registered under your state or territory;
- where you have made substantial contributions to the relationship and failure by the court to issue an order would result in “serious injustice”.
If your relationship falls under one of the above categories, then you can apply to the court to obtain property settlement orders or maintenance orders on the same principles that married couples do.
At the same time, if you or your partner want to avoid the court process, you may also wish to enter into a de facto relationship binding financial agreement (BFA).
Should I Get a Binding Financial Agreement Drafted?
A BFA is a legal contract setting out the division of assets between a couple in a relationship, either as de facto partners or marital partners. De facto partners can draft a BFA under sections 90UB, 90UC or 90UD depending on the stage of your relationship (entering, during or after the breakdown of the relationship). A BFA can help set out how you and your partner will divide assets in the event your relationship breaks down and will contract you and your partner out of a right to apply for a court order.
However, a party cannot use a BFA to explicitly try to establish that they are in a de facto relationship under the law – this is for a judge to determine should your relationship be called into question.
If you believe you are in a de facto relationship, you should consider the following key points:
- A de facto relationship has a legal definition which requires more than simply being together with your partner for two years;
- If you fall under the right criteria as a de facto couple and your relationship breaks down, you will be eligible to apply to the court for an order on property settlement or maintenance; and
- If you are in a de facto relationship, you can enter into a BFA to conclusively provide for the circumstances if your relationship breaks down.
If you are unsure about the status of your relationship or you need assistance drafting a binding financial agreement, get in touch with LegalVision’s business lawyers on 1300 544 755.
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