One question we are often asked is ‘how can I protect my assets from my new partner?’.
If you are in a de facto relationship your partner has two years from separation to make a claim on your assets if they can establish one of the following:
- You lived together as a couple on a genuine domestic basis for two years; or
- You have children together; or
- Substantial contributions are made on your property and there would be a serious injustice if they were not permitted to claim.
This means that your de facto partner can apply to the Court for a division of assets (some of which you may have owed prior to the relationship commencing).
De facto and married couples are treated virtually the same under the Family Law Act. After separation parties to a de facto relationship or marriage are entitled to seek a division of assets of the relationship. These assets include all assets held jointly or individually whether they were acquired prior, during or after the relationship.
Entering into a Financial Agreement is one of the only ways to ensure your assets remain protected in the even you separate. Both married and de facto couples can enter into Financial Agreements.
A Binding Financial Agreement:
- Allows you to determine how your assets will be divided upon separation.
- can be used as a safeguard or a type of ‘insurance’ to protect your assets in the event of a relationship breakdown.
- Can be entered into before the relationship starts or the couple are married, during the relationship or marriage or after the separation and for married couples after divorce.
SLF lawyers are well versed in preparing Financial Agreements to assist their client’s safeguard their assets in the event of a relationship breakdown.
Requirements of Financial Agreement
A Financial Agreement is binding on parties to the agreement, if and only if:
- The Agreement is in writing and signed by both parties;
- The Agreement includes a statement from each party to the agreement, that, before the agreement was signed each party obtained independent legal advice of their rights, advantages and disadvantages at the time the advices was provided to the party of making the agreement;
- The Agreement includes a certificate signed by the person providing the independent legal advice;
- The Agreement has not been terminated and has not been set aside by a court.
The Law in the absence of a Financial Agreement?
When considering the division of assets of a de-facto relationship or marriage, the court undertakes the following steps:
- Determine the asset pool
The asset pool is determined by taking the value of the assets of the parties held jointly and individually and deducting the liabilities of each party from them. Superannuation is also forms part of the asset.
- Assessment of contributions
The contributions of both parties are assessed from the commencement of living together and until the date of separation. Contributions can be financial, non-financial and as a home maker.
Typically, significant assets brought into a relationship at the commencement of a relationship are treated as being important to the assessment of property. However, this treatment may depend on varying factors such as the length of a marriage and the size of the asset pool.
Given the significant delay that we often face in having matters listed for a hearing, post separation contributions can become relevant and adjustments may be made to reflect this.
- Future needs
The court will then determine future needs of both parties such as earning capacity, the health of the parties and any caring responsibilities.
- Justice and Equity
The court will consider the length of the relationship and the factors discussed above to determine whether orders are considered just and equitable in all circumstances of the relationship.
For more information regarding Binding Financial Agreements and how to protect your assets during a relationship please contact SLF Lawyers on 03 9600 2450.
Article written by Jane Carmel and Bridget O’Kane of our Melbourne office.