It's a common misconception in Australia that people living in a de facto relationship have the same legal rights and considerations as those in a marriage.
Unfortunately, many couples discover that the rights of a de facto relationship differ from those of a marriage only when they separate and need to divide property, enter a custody dispute, or when one person in the relationship dies. They also often learn at this time that a de facto relationship must meet certain criteria to be deemed genuine.
How is a de facto relationship determined?
Contrary to popular opinion, a couple living together for two years cannot automatically categorise the relationship as de facto. There is, in fact, a long list of determinants that are used to establish whether a de facto relationship is genuine.
Defined in section 4AA of the Family Law Act 1975, a de facto relationship is determined by a series of circumstances, including the extent of common residence, whether a sexual relationship exists, the degree of financial interdependence and the extent of a mutual commitment to a shared life.
Implications of ending a de facto relationship versus a marriage
When de facto couples decide to separate, an application can be made to the Family Court and Federal Circuit Court, in the same way as married couples, to resolve any financial matters, property divisions and custody disputes.
However, people in a de facto relationship must satisfy the court that the relationship was genuine, and then meet one of the following four criteria:
- the relationship must have lasted for at least two years
- there is a child in the relationship
- the relationship is registered under a prescribed law
- one party has contributed substantially to the relationship and, if an order was not made, there would be a grave injustice
De facto couples must also apply for court orders within two years of the relationship ending. Outside this time, a person will need to prove hardship for the case to be heard. In contrast, married couples have no such time limit. While they must apply for a property settlement within 12 months of divorce, this can be extended with consent.
Meeting de facto relationship criteria can have an impact on where a case is heard
In a recent case, two people had been living together in a property owned by the female for over 30 years before the male moved out. Wanting to ensure that if the property was sold he would receive his share of the profit, the male commenced District Court proceedings on the basis that he held a constructive trust over the property. Although his name wasn't on the title, he had financially contributed towards the property's running costs, including rates and maintenance.
Although the couple had not been in a sexual relationship for the last 20 years and did not lead a shared life, they had continued living together and still had a degree of financial interdependence. The female claimed that it was a de facto matter, which led to a hearing that would determine which court would be more suitable, based on the evidence provided by both parties as to their relationship.
Parental rights of de facto couples whose children are conceived by artificial insemination
If a de facto couple has a child through artificial insemination, it may be necessary to prove legally that the relationship is genuinely de facto, for both to be registered as the child's parents.
It's also important to note that some overseas courts do not recognise de facto relationships.
De facto relationships in relation to wills and estates
When a person in a de facto relationship dies, if they hadn't created a will or estate plan, the situation can be treated quite differently to that of a married couple in similar circumstances.
For instance, what happens when a partner in a de facto relationship owns their house or was paying the mortgage for their home, then dies without leaving a will? Or what happens if a person dies without adequately providing for their de facto partner in their will?
In NSW, in order to challenge a will, an individual must be an "eligible person", as defined by the law. To be eligible, the de facto partner may have to prove they satisfy the requirements to be legally recognised as having been in a de facto relationship.
This could include a number of factors, including how long they had been together as a couple, how long they lived together, their degree of financial dependence, and whether they had shared care and support of children.
It may also be necessary to find witnesses to establish they were regarded as a couple by others and that they lived a shared life.
Superannuation death benefit could be paid to a new partner rather than the beneficiaries of a will
One of the most overlooked aspects of estate planning is superannuation and how it should be distributed when a person dies. Executing a Binding Death Benefit Nomination Form with a super fund ensures that a person's super will be paid to their nominated beneficiary.
If instead, a person who is in a de facto relationship relies upon their will, which appoints their children as beneficiaries, their super fund could potentially pay some or all of the person's super to their de facto partner.
In simple terms, superannuation doesn't automatically pass to the beneficiaries of a will. Upon entering a new relationship, it's a good idea for people to update their Binding Death Benefit Nomination Form with their super fund.
Determining if a de facto partner is next of kin
Unlike marriage, if there is a dispute about the care of a de facto partner who has been incapacitated, it is not automatically accepted that the other partner is considered next of kin and able to make decisions on their behalf.
While marriage will revoke a prior will, this is not the case for de facto relationships
It's important for couples who are getting married to remember that their exchange of vows will generally automatically revoke any existing will. This is unless the prior will had been specifically worded to address the impending marriage.
However, if a couple enters a de facto relationship and one de facto partner dies before making a new will, this can cause a dispute amont eligible beneficiaries, often ending in a court case. A judge must then decide how assets are to be allocated. With legal costs usually borne by the estate, this negatively impacts everyone involved.
If you are in a de facto relationship that has broken down, or you are considering a de facto relationship with your partner, it's wise to obtain legal advice that pertains to your particular circumstances.
Whether you need to review your will and estate plan, or need guidance on property settlement and custody agreements, seeking expert counsel can save you and your family much heartache.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.