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What Happens when your Relationship ends? Property Settlements Between De Facto Partners

28/09/2020

As and from 1 March 2009 the division of property between de facto partners (and this includes same sex partners) is dealt with pursuant to the Family Law Act 1975 (Cth).  Virtually the same principles apply as to married couples.  Prior to that date property disputes between de facto partners and same sex partners were determined in the District Court or the Supreme Court of New South Wales.

If you and your de facto partner separate (including a same sex partner) you will need to consider how to divide property that you and your partner own together and separately and to protect property that may be in your sole name.

Agreement and Settlement

It is possible for you and your de facto partner to negotiate and reach an agreement and have the property/financial settlement documented by lawyers.  The agreement reached must be properly documented so that it is binding and enforceable and prevents any claim being made in the future.  We regularly assist parties to resolve the issues and come to an agreement.  Coming to an agreement is likely to result in a better deal for each party as it will save significant legal and associated costs of an ongoing dispute resolved by a Court decision.  We often advise one party of the appropriate recommended settlement and most often the matters are settled usually at an early stage.  There are benefits (other than financial) that often result from a settlement in particular, at an early stage.

We recommend that when agreement is reached that the following documents be entered into to ensure a proper documentation of property/financial settlement:

  1. Application to the Family Court of Australia for approval of Consent Orders will divide property and facilitate exemption from stamp duty on transfer of property. 
     
  2. Binding Financial Agreements.  A properly drafted and executed Binding Financial Agreement will protect you from the possibility of further claims being made against you at some time in the future. 
     
  3. Deed of Release – Succession Act 2000 – Will prevent claims against your estate.    

What if You Cannot Agree

In the event that you and your partner cannot reach an agreement then it may be necessary to make an application to the Family Court of Australia or the Federal Circuit Court of Australia.  This process is commenced by one or other of you by way of the filing of an Initiating Application in Court.  A Response is filed by the other party and the Court then determines the claim after all appropriate evidence is assembled and prepared in the appropriate form for presentation to the Court.  The Court often applies the following four stage approach.

Four Stage Approach

  1. The first stage is to identify and value the property and financial resources of you and your partner.  The Court will calculate the net assets owned by you and your partner at the date of the final hearing.  This stage requires both you and your partner to make full and frank financial disclosure of your respective financial circumstances.
     
  2. The second stage is to identify and assess the contributions made by you and your partner being the financial and non-financial contributions and contributions to the welfare of the family including contributions as a homemaker and parent.  This step requires the Court to retrospectively assess contributions made by or on behalf of each of you.  The Court will take into account:
    1. The Financial Contribution made directly or indirectly by a party or on behalf of a party to the relationship to the acquisition, contribution or improvement of any of the property of the parties (including past property).
       
    2. The contribution (other than the financial contribution) made directly or indirectly by a party or on behalf of a party to the acquisition maintenance and improvement of property including past property.
       
    3. Contributions made by a party to the relationship for the welfare of the family.
       
    4. The effect of any proposed Order upon the earning capacity of either party to the relationship.
       
    5. Matters referred to in section 90SF so far as they are relevant (see below).
       
  3. The third stage is that the Court will then assess the need for adjustment.  In looking at whether an adjustment of the result which would be the outcome, the Court is required to look at Section 90SF of the Act.  This requires an assessment of the respective needs and resources and earning capacities of each of you and your partner and involves the Court in prospectively assessing the needs and resources of each of you. (See Section 90SF).  Financial resources are to be taken into account.
     

    The main factors set out in section 90SF are:

    1. The age and state of health of each of the parties to the de facto relationship;
       
    2. The income, property and financial resources of each of the parties and the physical and mental capacity of each of them for appropriate gainful employment.
       
    3. Whether either party has the care or control of a child of the de facto relationship who has not attained the age of 18 years.
       
    4. Commitments of each of the parties that are necessary, to enable the party to support himself or herself and a child or another person that the party has a duty to maintain.
       
    5. The standard of living that is in all the circumstances reasonable. 
       
    6. The extent to which the payment of maintenance to a party might increase their earning capacity by enabling them to undertake a course of education or training. 
       
    7. The effect of any proposed order on the ability of a creditor or party to recover the creditor’s debt.
       
    1. Any other Order made under the Act affecting a party to the de facto relationship or a child of the de facto relationship.
       
    2. Any Child Support Agreement under the Child Support Assessment Act that a party to a de facto relationship is provided or is to provide or might be liable to provide in the future for a child of the de facto relationship.
       
  4. The fourth stage is the Court must also bring in a result/make a decision which, in the overall sense is just and equitable. 

At Watson & Watson our experienced Family Lawyers can represent you in this process to protect your interests.  We understand that this can be a stressful process and we endeavour to reach an equitable and cost effective financial/property settlement for you.  Please do not hesitate to contact Richard Watson Senior Family Law Solicitor or his Personal Assistant Shereen Da Gloria to discuss your concerns and seek the appropriate advice.

This is only a preliminary view and is not to be taken as legal advice without first contacting Watson & Watson Solicitors on 9221 6011.

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