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De Facto Relationships and the Family Law Act

By Colonial First State
5 November 2009

This means that binding financial agreements, superannuation agreements and court-ordered property settlements may all be available to de facto couples, including same sex couples, in much the same way as is already available to couples in a marriage.

What is a de facto relationship?

A de facto relationship is defined in the FLA as a relationship between two people who:

• are not legally married
• are not related by family (Related by family' means one person is the child or other descendant of the other or the individuals have a parent in common, both natural and adoptive relationships are contemplated by 'related by family'.)
• have a relationship as a couple living together on a genuine domestic basis, having regard to all the circumstances of the relationship.

A de facto relationship can exist between individuals of the opposite sex or of the same sex and even where one of the individuals is legally married or in a de facto relationship with someone else.

Court-ordered property settlements for couples in a de facto relationship

Having established that a de facto relationship exists, further tests must be met before a court-ordered property settlement can be made under the FLA. These are that:

• the relationship is of at least two years duration
• there is a child of that relationship
• one party has made a substantial contribution to the relationship and not allowing a property settlement would result in a serious injustice to them, or - the relationship is a registered relationship under a State or Territory law.

The court has powers under the FLA to determine any of the above and where each of the parties was ordinarily resident. In deciding whether a de facto relationship exists the court may consider whether there is a common residence, ownership of property, the existence of a sexual relationship, financial dependence or interdependence, whether the individuals provide care and support for each other and the public aspects of the relationship.

Former de facto couples have two years from the end of their relationship during which they may seek a court-ordered property settlement. A property settlement may still be effected after this period, if the leave of the court is given. The court may grant leave if satisfied that hardship would be caused to the spouse(s) or their children without a property settlement or if the applicant for the property settlement is at that time unable to support him or herself without a government pension or benefit.

Child of a de facto relationship

A child will be considered a child of a de facto relationship where each de facto partner is the parent of the child or where the child is adopted by both partners or by one only with the consent of the other or where the child is born through artificial conception or surrogacy arrangements to both of the partners. The existence of a child may assist in determining whether a bona fide de facto relationship exists or whether a property settlement can be concluded between the individuals in a de facto relationship of less than two years.

Binding financial agreements for couples in a de facto relationship

A de facto couple can make a binding financial agreement under the FLA before the  commencement of, during or after the end of a de facto relationship. However, in doing so, they cannot be spouse parties to any other binding financial agreement with respect to any of the matters in their binding financial agreement. This means that two binding financial agreements cannot cover the same income or assets, effectively avoiding potential conflicts. This does not, however, prevent a person from making separate binding financial agreements with say, a legal and de facto spouse or with two de facto spouses covering separate matters.

Other aspects of the FLA, including super splitting and capital gains tax rollover relief, have also been addressed. Should you require further information, please contact your adviser at WLM Financial Services.

Printed from wlm.com.au
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