The facts about de facto

The Family Law Amendment (De Facto Financial Matters and other measures) Act took effect on 1 March 2009.

This legislation has seen de facto financial matters dealt with by the Family Court and Federal Magistrates Court in the same way as those courts previously dealt with financial matters involving only married couples. Where agreements are reached, de facto parties will have the ability to negotiate and enter into financial agreements. For married and de facto couples alike, orders or agreements may be made in respect of property settlement, superannuation splitting or spousal maintenance. This represents a huge change in the benefits available to de facto parties, particularly with respect to spousal maintenance and superannuation splitting.

Over the past few years, various states and territories have handed over jurisdiction to the Commonwealth with respect to de facto financial matters. The Act will apply to all people ordinarily resident in New South Wales, Victoria, Queensland, Tasmania, the Australian Capital Territory, Northern Territory or Norfolk Island. Western Australia, with its own Family Court, already had provisions within its Family Court Act 1997 for there to be financial agreements and proceedings between parties to de facto relationships. South Australia also is yet to relinquish its state-based jurisdiction in this area.

Since the commencement date of the new legislation, parties to a de facto relationship are now able to enter into binding financial agreements and commence proceeding in financial matters under the Family Law Act just as the parties to a marriage have been able to do. The Family Law Act will apply to all de facto parties who separate on or after the commencement date.

By agreement, de facto couples who separated prior the commencement date of the Act can elect to utilise the new provisions rather than the existing state-based legislation. Arguably, the Family Law Amendment (De Facto Financial Matters and other measures) Act marks the greatest change on the Australian family law landscape since the commencement of the Family Law Act itself in 1975.

Already in effect are a number of smaller changes that are important to note. With particular regard to Financial Agreements, some of the changes include:

• Third parties can now be party to a financial agreement between married parties. Section 4(1) of the Act (as amended) defines spouses as “spouse parties” and any other parties to a financial agreement as a “third party”.
• The definition of “a financial agreement” under section 90B, 90C and 90D of the Family Law Act now includes that spouse parties can make an agreement with one or more persons and that the agreement can be terminated only if all of the parties to it make a new agreement.
• Section 90K now provides an additional ground for setting aside a binding financial agreement, namely if the purpose of the third party entering into the agreement was to defeat a creditor.