When you enter into a family law ‘de facto relationship’, legal ramifications may flow from that decision, namely, you may incur financial obligations when you separate from your partner. Read on to find out some useful tips to protect your assets when entering a de facto relationship.
In our last blog we explored the case of Chancellor & Mccoy where the court declined to make an order for property settlement in a same-sex de facto relationship of 27 years. The basis of the court’s decision was that it was not just and equitable to make an order altering the interests of the parties in their property because among other things, the parties remained financially independent throughout the relationship.
This case applied to a very particular set of facts and circumstances. It is very rare for a court to find that parties to a relationship are not entitled to an order for the division of their property.
Each case is different and will be determined based on its own merits.
However, the case provides a useful guide as to some top tips to protect your assets while in a de facto relationship.
10 tips to protect your assets:
- Draw up a binding financial agreement that sets out the assets each party has and how they will be divided in the future, if you separate;
- Keep all your finances separate;
- Do not have joint bank accounts;
- Do not have joint assets. All assets you purchase should be in your sole name;
- Do not accept financial assistance from the other party. All assets should be purchased with your income. All your living expenses should be paid with your own income. All renovations to your property should be funded solely by you;
- Do not accept non-financial assistance from the other party, for example, if they offer to help renovate your property. If they offer for you to live in their property rent free, you should be contributing rent to cover your living expenses;
- You should remain responsible for your own debts. Do not accept financial assistance from the other party;
- Make your own financial decisions and spend your income without consulting the other party. There should be no accountability to the other party as to what you spend your money on;
- Do not discuss your financial situation with your partner;
- Do not make provision for the other party in your will or as a beneficiary of your superannuation or life insurance;
Important to remember
Following our 10 tips to protect your assets is by no means a hard and fast guarantee for those wishing to protect their assets.
Whilst entering into a Binding Financial Agreement does not provide an absolute guarantee, of our 10 tips to protect your assets, it is the most effective method to protect your assets from a claim by your partner when/if you separate.
A Binding Financial Agreement is particularly important where one party has significantly greater assets than his/her partner.
We recommend that anyone in a de facto relationship who is wanting to protect their assets should enter into a Binding Financial Agreement which sets out exactly how your assets are divided with your partner upon separation. In doing so, it will give you peace of mind and you will reduce the risk, uncertainties and costs of possible litigation in the future.
Contact our Petrie family law expert, Courtney Barton, to discuss your particular circumstances and whether a binding financial agreement is right for you.