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De facto Property Settlement
As de facto property settlement is now very similar to matrimonial property settlement, there is sometimes confusion about exactly when a relationship becomes de facto? When you are married conveniently, there is a suitably dated piece of paper reminding you of your marital status, however when will a Court say your partner is now your de facto?
According to Section 4AA of the Family Law Act 1975 (Cth), a de facto relationship exists where a couple is not legally married or related, and, having regard to the all the circumstances of their relationship, they have a relationship as a couple living on a genuine domestic basis.
The Act helpfully describes the circumstances which may demonstrate a couple is in a relationship such as:
- the duration of the relationship,
- the nature and extent of their common residence,
- whether a sexual relationship exits,
- the degree of financial interdependence,
- the ownership of property,
- the degree of commitment to a shared life,
- whether the relationship was registered,
- the care and support of children,
- and the reputation and public aspect of the relationship.
Any number of the above factors, to varying degrees, can add up to equalling a de facto relationship.
The de facto definition includes same sex relationships, and interestingly, relationships where one of the parties is legally married to another person or in another de facto relationship.
‘De facto’ is a Latin expression and can be defined as “existing in fact, although perhaps not intended, and legally recognised as so”. The term is applied to relationships in which a couple is considered to be married in all but name. In a majority of de facto relationships encountered in family law practice, a couple lives together, shares finances, appears publically as a couple, owns property together, has a sexual relationship, and perhaps has children together, but not necessarily all of the above.
If it transpires that you are in a de facto relationship by the definition above, there is no automatic entitlement to a division of property under the Act.
For the Court to have the power to make de facto property settlement Orders To be classified as a de facto relationship the Family Law Act states that there may be:-
- The period of the relationship is at least 2 years; or
- that there is a child of the de facto relationship; or
- a party has made substantial contributions to the relationship and failure to allow a division of property would result in a serious injustice to the applicant.
If the Court is satisfied of one or more of the above, the Court will then go on to consider what type of a property division would be appropriate.
The court applies the same formula to the division of de facto property as it does to matrimonial property. It is a five step process as follows:
- The Court decides whether it would be just and equitable to make a property division. If the Court decides it would not be just and equitable to make a property settlement in the circumstances, the Court cannot make an Order to divide the property.
- The Court identifies and values the assets and liabilities.
- The Court considers the contributions made by each party to the property pool. The contributions are classified as financial contributions, non-financial contributions and contributions to parenting and homemaking.
- The Court considers the future needs of each party. Relevant factors will be such things as the age difference between the parties, their health, their earning capacity, and the care of young children.
- The final step taken by a Court in property settlement matters is to decide what division is just and equitable. This involves the Court looking at the situation as a whole and deciding what Orders it considers fair taking into account the size of the property pool, the living circumstances of the parties, their ability to support themselves, their contributions, and any other factor it considers relevant.