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What is a De Facto Separation Agreement?

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A De Facto Separation Agreement (also called a Binding Financial Agreement) is a legally binding contract that outlines how a separating de facto couple will divide their assets and finances. 

It is designed to provide clarity, prevent future disputes, and offer financial security to both parties. This agreement can address issues like property division, financial support for one partner, arrangements for shared debts, and other financial matters arising from the separation. 

Unlike court-imposed orders, a De Facto Separation Agreement allows the couple to reach their own settlement terms, saving them time, money, and the potential stress of court proceedings.

How do you qualify for a de facto separation?

To qualify for de facto separation in Australia, you generally need to meet the following criteria:

  • Duration of the Relationship: According to Section 4AA(2)(c) of the Family Law Act 1975, one of the factors that might be considered in determining whether a relationship is de facto is the duration of the relationship. While a two-year period is a common benchmark, it is not an absolute rule and can be waived depending on other circumstances (see below).
  • Genuine Domestic Basis: The couple must have lived together as a couple on a genuine domestic basis. This goes beyond just sharing a residence and involves factors like a shared household, commitment, financial interdependence, and public perception of the relationship.
  • Separation: The relationship must have ended, and at least one partner must communicate the decision to the other. Evidence of the separation, such as moving out, ceasing a sexual relationship, or informing others of the split, must also be present.

Exceptions to the Two-Year Rule:

You may qualify for de facto separation even if your relationship didn’t last for two years if:

  • You have a child together: Having a child in the relationship can override the two-year requirement.
  • Registered Relationship: Your de facto relationship was registered under a state or territory law.
  • Significant Contributions: One partner made significant financial or non-financial contributions to the relationship.
  • Serious Injustice: If the relationship is not recognised as de facto due to certain circumstances, there is potential for serious injustice.

Also read: From Cohabitation to Courtroom: De Facto Relationship Rights Australia

What should be included in a de facto separation agreement?

Here’s a breakdown of what should be included in a de facto separation agreement in Australia:

  1. Division of Assets and Liabilities: Clearly outline how the following will be divided:
  • Real estate (family home, investment properties)
  • Vehicles
  • Bank accounts, investments, and shares
  • Superannuation (retirement funds)
  • Businesses and business interests
  • Personal belongings (furniture, jewellery, etc.)
  • Debts (mortgages, loans, credit cards)
  1. Spousal Maintenance: Specify if one partner will provide ongoing financial support to the other. This includes the amount, duration, and circumstances under which it may change.
  1. Parenting Arrangements (If applicable): Detail the care, living arrangements, financial support, and decision-making responsibilities for any children of the relationship.

Also read: De Facto Breakup Entitlements Australia

Is a de facto separation agreement legally binding?

Yes, a de facto separation agreement can be legally binding in Australia if it is formalised as a Binding Financial Agreement (BFA) under the Family Law Act.  To be considered legally binding, the agreement must meet specific requirements.

Both parties must receive independent legal advice, their lawyers must sign certificates confirming they’ve provided this advice, and the agreement must be in writing and signed by both parties.

Adhering to these requirements ensures the agreement is fair, understood by both parties, and is enforceable by the courts.

How to file a de facto separation agreement?

A de facto separation agreement is not filed in the same way you would file for divorce. Instead, here is how to make a de facto separation agreement legally binding:

  1. Create the Agreement: Negotiate with your ex-partner to outline the terms of your separation, including asset division, financial support, and any parenting arrangements. It’s strongly recommended to seek guidance from separate lawyers specialising in de facto property settlement to draft a comprehensive and fair agreement.
  2. Obtain Independent Legal Advice: Each partner must receive independent legal advice from their own lawyer. The lawyer will review the agreement, explain its ramifications, and ensure their client’s interests are protected.
  3. Sign and Formalise: Once both parties are satisfied with the agreement and have obtained independent legal advice, the document must be:
    • Drafted in writing
    • Signed by both parties
    • Witnessed by their respective lawyers who will sign certificates confirming they have provided independent legal advice
  4. Enforcement: A properly executed Binding Financial Agreement is a legally binding contract. If either party breaches the agreement, steps can be taken to legally rectify the contravention.

Can you revoke a de facto separation agreement?

Yes, under certain circumstances, it’s possible to revoke or set aside a de facto separation agreement (Binding Financial Agreement) in Australia. Here are the main ways this can happen:

  • Mutual Agreement: If both parties agree to change or terminate the agreement entirely, they can create a new Binding Financial Agreement reflecting their revised terms. Both will need to obtain independent legal advice again.
  • Non-compliance with formal requirements: If the agreement does not adhere to the strict legal requirements for a Binding Financial Agreement (e.g., lack of independent legal advice, not in writing), it may be considered invalid.
  • Unfairness or Misconduct: Courts can set aside an agreement if:
    • There was fraud or dishonesty during the creation of the agreement.
    • One party was under duress or undue influence when signing.
    • The agreement is substantially unfair to one party and causes significant injustice.
    • There was a failure by one or both parties to disclose significant assets or liabilities.
  • Significant change in circumstances: If a major and unforeseen change in circumstances occurs (e.g., serious illness, job loss) that renders the agreement significantly unfair, a court can potentially adjust or set aside the agreement.

Curious about what is a de facto separation agreement?

A De Facto Separation Agreement provides clarity and security during a difficult transition. It outlines how assets are divided and addresses financial obligations, ensuring a fair and smooth separation.

At Justice Family Lawyers, our experienced team understands the complexities of de facto relationships. We’ll work with you to create a legally sound agreement that safeguards your interests.

Contact us today to schedule a consultation and take control of your financial future.

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