FAQ about financial agreements and property settlement

De facto couples are treated no differently than married couples. Under the Family Law Act, both de facto and married couples have the same rights.

The Family Law Act covers married couples in every state of Australia, and covers de facto couples for every state except Western Australia. De facto couples in W.A. are covered by the Family Court Act.

A de facto relationship is defined in section 4AA of the Family Law Act.  It is a relationship that two people who are not married or related by family have as a couple, living together on a ‘genuine domestic basis’.  It can exist between two people of the opposite sex, or between two people of the same sex.  Your relationship is not a de facto relationship if you are legally married to each other, or if you are related by family.  All the circumstances of the relationship will determine whether a couple are in a de facto relationship.  These include:

• the nature and extent of the common residence;
• the ownership, use and acquisition of any property;
• whether a sexual relationship exists;
• the degree of financial dependence or interdependence and any arrangements for financial support of one and other;
• the duration of the relationship;
• the degree of mutual commitment to a shared life;
• whether the relationship has been registered, in a state or territory with laws for the registration of relationships;
• the care and support of children;
• the reputation and public aspects of the relationship.

It’s not unusual for de facto couples to get married after they’ve been living together for a while.  In this case, they want to know whether their cohabitation agreement will suffice, or if they will need to enter into another agreement (usually a pre nuptial or post nuptial agreement).

Essentially, a de facto agreement and a prenuptial or post nuptial agreement are not the same thing.  Even though de facto couples and married couples have essentially the same rights, the Family Law Act deals with married and de facto couples separately, under different sections of the Act.  This means that you cannot rely on a de facto agreement if you later marry.  You will come under Part VIIIA  for married couples (rather than Part VIIIAB for de facto couples).

You do, however, have the option to enter into a new agreement that will cover the marriage relationship.  This also gives a couple the opportunity to review any prior de facto agreement, particularly in light of changes (or anticipated changes) to the relationship, such as the  arrival of children and the resulting change to the relationship dynamics.  In any event, it is recommended that you review your financial agreement regularly, regardless of a change in status of the relationship.

When considering whether to make a de facto or marriage financial agreement, there are a two important factors to consider.  The first is that a cohabitation or de facto agreement deals with what should happen if the de facto relationship breaks down.  If the couple marries, the de facto relationship has not broken down, making the de facto agreement void.  It simply ceases to be applicable.

The second factor is a reversal of the first, in that a pre nup agreement (being a pre marriage agreement made under the marriage provisions of the Act), will offer no protection if you are currently in a de facto relationship and you separate before the marriage actually takes place.  That is, if you’re planning on getting married, and are currently living together in a de facto relationship, you need to be aware that a pre nup agreement (pre marriage agreement) will only come into effect once the marriage takes place.  So making a pre nup with the intention that it will also protect you during the course of your de facto relationship prior to the wedding, is not accurate.