Saturday, February 19, 2011

DE FACTO RELATIONSHIPS

Couples live together without being legally married.  This is often called ‘de facto’ marriage. The term ‘de facto’ means ‘in fact’.

There is no single legal definition of the term ‘de facto’.  De facto relationships may be recognised for one legal purposes but not another.  Those purposes may change as the relationship changes.


The Law in Western Australia

If you separated from you de facto partner on or after 1 December 2002, and satisfy other conditions, then you may be able to apply to the Family Court of Western Australia (the Court) to have your property settled and/or any disagreements relating to partner maintenance.

The other conditions that must be satisfied in order for you to make an application to the Court are:

·                Either you or your partner lives in Western Australia on the day the application is made to the Court; and
·                You and your partner lived in Western Australia for at least one third of your relationship, or the party making the application has made substantial contributions to property or the welfare of the family in Western Australia.

If you separated before 1 December 2002, or do not meet the other condition, then you cannot apply to the Family Court to ask it to settle any disagreements between you and your partner relating to property or financial matters.  This will be discussed later under the heading ­ Property Arrangements: Couples who separated before 1 December 2002 or do not otherwise qualify for property settlement in the Family Court.

If you have satisfied the conditions to enable you to make an application to the Court, there will be three situations in which orders will be made:

·                There was a de facto relationship lasting at least 2 years;
·                There is a child of the de facto relationship under 18 years old and there would be serious injustice to the partner caring or responsible for the child if no order were made; or
·                The person applying for property orders has made substantial contributions to the property or the welfare of the family and would suffer serious injustice if no orders were made.

What is a de facto relationship?

A de facto relationship refers to a relationship between two people who are not married, but who live together in a marriage-like relationship.  Indicators of a de facto relationship may include:

·                The length of the relationship between you and your partner;
·                Whether you and your partner have lived together;
·                Whether there is or has been a sexual relationship between you and your partner;
·                How financially dependent you have been with your partner and vice versa;
·                The commitment with your partner to any children and a shared life;
·                Ownership of property between you and your partner;
·                Whether your friends and family see you as being in a de facto relationship.

It doesn’t matter that you and your partner are the same sex, or legally married to someone else or in a de facto relationship with someone else.

What does substantial contribution to property, or the welfare of the family mean?

If you need to satisfy the condition that substantial contribution to property or welfare of the family has been made, you will need to get legal advice.  Some things for you to think about before getting legal advice include:
·                What direct or indirect financial contributions to property of the relationship have you made?
·                What direct or indirect non-financial contributions to the property of the relationship have you made?
·                What contributions have you made to the welfare of your family ­ including as a homemaker or parent?
·                Where in Australia were you living when you made the contributions?


Have you separated?

It is very important for you to get legal advice about whether you are separated or not and when the separation legally occurred.  An application for property settlement must have been made within 1 year of separation.  If more than a year has passed and no application has been made, you may have to use laws as they applied before 1 December 2001.

Whether you are separated or not will depend upon the facts of your case. Some things to consider are:

·                Have you definitely decided to end the relationship, and when did you decide?
·                Have you communicated this decision to your partner and when?
·                Are you still living with your partner?
·                Are you still having a sexual relationship with your partner?
·                Are you and your partner still behaving as if your de facto relationship is continuing in your relationship with each other?
·                Have you acted to reach agreement about arrangements for your children?


De facto relationship property settlements under the Family Court Act

Property settlement means an agreement between you and your partner, or an order of the Court about dividing your property once you have separated.  There are three aspects to a property settlement:

1.         Identifying the property

Property includes all the property of you and your partner whether owned individually by you or jointly with your partner or with a third party, for example, any interest in real estate, businesses, motor vehicles, shares, savings, furniture and chattels (pots, pans).  Property does not include entitlements in the future such as dividends, superannuation or unpaid compensation claims.  Once the property has been identified, it then needs to be valued.

2.         Past contributions

After determining the value and nature of the property, the next stage is to consider the contributions to your property made by you and your partner.  Contributions include financial and non-financial, and direct and indirect.  Examples of these are, wages, inheritance, previous savings, previously owned property, home duties, parenting duties, house maintenance and gardening.

3.         Future needs

The final stage is to consider the future needs of you and your partner and then adjust the property taking into account all three aspects of your property settlement.  An examination of future needs may include:

·                The age and state of health for you and your partner;
·                Income, financial resources and ability to obtain work;
·                Whether you have children in your care;
·                You and your partner’s financial needs and obligations;
·                Your standard of living;
·                You and your partner’s eligibility for pension or benefits;
·                Whether you or your partner has begun cohabiting with another person and the financial circumstances relating to the cohabitation.


Negotiating a settlement

It is always best to try to negotiate a settlement with your partner rather than going to Court. During negotiation, you and your partner should consider dividing the property the same way the Family Court would, i.e. consistent with Family Law principles referred to above.  If you reach an agreement, you should each get legal advice (separately) before formalising it.

If an agreement is reached you may

·                Keep the agreement as an informal arrangement, but remember, an informal agreement will not be enforced by the Family Court, and may leave you open to later re-distribution of property by the Family Court.
·                Apply to the Court for Consent Orders using a Form II.
·                Enter into a financial agreement in accordance with the Family Court Act.


“Financial Agreements” are agreements under the Family Court Act.  They operate similarly to contracts, and can be made before or during a relationship or after a relationship has ended.  These are discussed under a separate heading below, as different legal principles apply.


A negotiated settlement avoids the potentially high cost of Family Court proceedings.  Some people benefit from assistance through mediation; however, if you and your partner cannot reach an agreement and there is no binding financial agreement, you can apply to the Family Court for a property settlement.  An application made to the Family court prior to any genuine attempt to resolve the dispute may incur additional cost penalties.


Pre-Action Procedures (PAP)

You are required to follow what is called Pre- Action Procedures.  This means you must make a genuine attempt to resolve your disagreements with your partner prior to making an application to the Court.  You will need to get legal advice about the requirements of PAP, which include your duty to make full disclosure of all financial circumstances which will effect the property settlement.  The Court specifies the financial circumstances which require disclosure, including:

·                The parties earnings including income that is paid or assigned to another party;
·                Any vested or contingent interest in property;
·                The parties financial resources;
·                Any trusts; and
·                Any property or any disposal of property.


Preventing sale of assets

If there is a risk that your partner might attempt to sell any of the property of the relationship before a property settlement is finalized, the court may issue an injunction to restrain him or her and to preserve the property.


12 month time limitation period

Applications to the Family Court for property settlement, including applications for Consent Orders, need to be made within 12 months after their relationship ends.  In special circumstances, the court might give permission (i.e. leave of the court) to file an application after this time has expired

If more than 12 months have passed and they have no property settlement, you should see a lawyer for advice without delay.

WARNING: get advice, including advice about tax implications of any agreement, and the impact of financial settlements/agreements on pension entitlements, property settlement or partner maintenance claims.


Family Court:  Financial Agreements

From 1 December 2002, you and your partner have been able to make what are called Financial Agreements (FA’s).  These operate similarly to a contract between you and your partner.  The following information is very general and you must get advice about FA’s.

FA’s
·           Can set out how all or any of the property or financial resources are to be dealt with if the relationship breaks down.
·           May also deal with partner or child maintenance (stage one).  The part of an agreement dealing with maintenance will be void unless certain requirements are met.
·           Can be made before or during a relationship or after separation.
·           Don’t require registration in the Court to be enforceable.  For this reason, there are very strict requirements about the process of completing an agreement.  For example, you and your partner must get legal advice on very specific matters before signing the agreement.  There are also requirements about how a lawyer certifies that they have given this advice.

If binding a FA can only be set aside in limited circumstances, including:

·                The agreement cannot be carried out.
·                The agreement was obtained by fraud (including non-disclosure of a material matter) or it is void/voidable/unenforceable according to contract law.
·                There has been a significant change in circumstances and as a result a child or the resident parent would suffer hardship if the agreement were enforced.
·                You or your partner behaved unfairly in relation to the making of the agreement.
·                If enforcing a FA, the court applies contract law, not the Family Court Act principles.


Property arrangements: Couples who separated before 1 December 2002 or do not otherwise qualify for property settlement under the new laws

The following information applies to you if you either:

·                Separated before 1 December 2001
Or
·                Do not meet the conditions that the Court requires as mentioned above.

Their starting point is generally that the legal owner is the person whose name the property is in.  It is up to the person making a claim to show that the property, is in fact, theirs because they paid for it or have some other legal claim.

If both parties are willing, they can negotiate their own division of the property.

The parties may have an agreement which covers how their property will be distributed.  They need legal advice about whether their agreement is binding before relying on it.


What is property?
Property may include things such as household items, money in bank accounts, cars, land, houses, investments or shares.  It does not include superannuation or unpaid insurance or compensation claims.


Examples of where problems may arise.

When a de facto relationship ends problems may arise where property is in one persons’ name but the other party has contributed to that property in some way and feels they have an interest in it.  For example, during the relationship:

·                A car is in one person’s name but the other person pays the weekly payments and the car was intended for use by both parties;
·                One person may have the house in their name and pay the mortgage on the understanding that the other person pays for all household costs and improvements;
·                One person may pay the deposit on the home and place their name on the title then the other person pays the mortgage; and
·                Household items are purchased with joint funds.


What to ask for?

You may ask for the property to be returned to your possession since you paid for it, it was a personal gift, you owned it before the de facto relationship began, or other valid reason.

If the property cannot be divided according to the direct contributions made by the parties during the relationship it may be sold and the net proceeds divided, or it may be placed in the possession of one party and a sum of the money equal to the proportion of the other party’s contribution to be paid to the other party.


Negotiations or Court

It is important to negotiate a settlement of de facto property rather than go to court because legal procedures are expensive, complicated, lengthy and uncertain.

Help in negotiating, or persuading the other party to agree to negotiating, may be obtained through the Citizen’s Advice Bureau, Relationships Australia, Centrecare or a Community Legal Centre.


Which Court?

If negations fail (or never begin), and the value of property is high, it may be necessary to start procedures at court, however, it may be possible at any time to recommence negotiations and settle the matter by agreement.

The kind of property involved will dictate which court deals with the claim, for example:

·                Other than houses and land etc, property up to the value of $25,000 dollars may be brought in the Local Court.
·                Where property (not including land) is valued between $25,000 and $250,000, the case may be heard in the Supreme Court.


Renting Property

Whoever signs the lease agreement is the legal tenant.  They are liable for paying the rent and keeping the terms and conditions of the lease agreement.

If you both sign the lease, you are both equally liable for paying the rent and keeping to the lease.  If either or both of you breach the lease, the property owner can sue any one or both tenants.


Owing property

In both names

Many de facto couples buy a house, flat or land together.  If you do this as “joint tenants”, each person owns the whole property and ownership passes to the surviving party when one dies.

If you own property as ‘tenants in common’, each person owns only the portion described on the title deed, i.e. ‘equal shares’.  Each person may sell their share in the property or leave it to someone else in their will.

If your de facto relationship ends, try to agree about:
·                If the property should be sold and how to divide the proceeds;
·                If one person will keep the property (transfer into one name) and how much to pay the other for their share; and
·                (For both the above) who will pay the stamp duty and other costs.


Disputes in de facto property

It may be difficult to get your share of the property if there is a disagreement.  Generally, in a de facto relationship the person who paid for it is the owner.  It is a good idea to keep good financial records.  Keep receipts and loan payment records, all bank card and credit card statements, and cheque book stubs.


Owning property in one person’s name only

If the property is registered in one person’s name only, that person is the sole legal owner of the property.  Another person may have serious difficulty getting a share if the owner refuses to negotiate.  It may be possible to apply to the Supreme Court.  This procedure is expensive and uncertain.

            Always get legal advice before applying to the Supreme Court.


Caveats

A caveat is a notice, registered with DOLI (Department of Land Information), and placed on the land title to stop dealings with that land.  The owner is notified when a caveat is placed on their property.  If the owner tries to mortgage or sell the property the person who lodged the caveat (the caveator) is notified.

The caveator may have to justify the caveat (prove their interest in the property) or else pay the legal costs of the owner in having the caveat removed and any associated costs or lost profits.

The owner may object to the caveat and the caveator will then have to justify the caveat and apply to the Supreme Court for an order to extend the caveat.

It is important to get legal advice because there may be legal costs associated with lodging a caveat where there are no grounds for doing so.


Cars, caravans and other vehicles

The legal owner is the person whose name is on the licensing papers.

Transfer ownership by completing the required transfer documents.

Stamp duty may be payable to take the above step.

If one party paid all or part of the vehicle and it was not a gift, the client needs legal advice.

Before getting legal advice, a client should:

·                Gather any evidence of contributions, (e.g. receipts, bank statements, cheque butts, documents, letters, diaries) and take it to the appointment;
·                Try and recall dates and times of relevant conversations and whether any witnesses were present.


Shares and Businesses

A business is a company if it is registered as one ­ for example, under the Corporations (Western Australia) Act 1990 (WA).

The person whose name is on the share certificate or the share book of a company is the legal owner of the company.

An interest in a company is set out in the company memorandum or in the partnership deed.

A partner or a shareholder may need to take PROMPT steps to reduce the risk of being held responsible for debts incurred by another partner or shareholder.

A client may need legal advice as soon as possible.


Household items

Furniture, electrical equipment and other household items normally belong to the person who bought them.  Usually, it is not worth going to court for ‘chattels’ and negotiation or mediation is preferable.

Court proceedings are expensive and may be complicated, so it is important to get advice about legal costs and compare that to the value of the items in dispute.


Social security

If you get a Centrelink benefit or pension you must tell Centrelink when starting or ending a de facto relationship.  It may affect how much money you get.

If you don’t tell Centrelink about a change in your circumstances you may be overpaid.  This could mean being charged with a criminal office or having or benefit reduced.

To contact Centrelink go to http://www.centrelink.gov.au/

For help dealing with Centrelink contact the Welfare Rights and Advocacy Service at http://www.wraswa.org.au/


Income tax

Australian income tax laws recognise de facto partners.  In some cases you can claim the same deductions as a married person.

For more information on income tax go to http://www.ato.gov.au/


Bank accounts and credit cards

Legal Owner

The person named on the account is the legal owner.

A person who is authorised to use an account or credit card MAY NOT be an ‘owner’ of the funds.

An “authority to use” may be cancelled at any time by the owner.

If the account is in joint names both people are owners and it is presumed money may be divided equally unless the contributions were different and there is an agreement to divide the funds in a different way.

If you have a joint account or credit card, or if you have given authority to your partner to use your account, you should be aware of the risk of your partner incurring debt for which you may be liable.

You should consider cancellation of any authority to use their account by notifying the bank in writing or by fax.


Stopping funds being withdrawn from a bank account

You may be able to apply to Court for an injunction to prevent money being taken out of a bank account.  This may be difficult and expensive and legal advice is necessary.

It is unlikely that an injunction would be granted to prevent someone withdrawing funds from an account in their name.

It may be worth explaining the circumstances to the bank accountant and requesting them to ‘freeze’ the account until an agreement is reached.


Joint accounts requiring both signatures

If you have reasonable grounds to be concerned about fraud, such as your signature being forged, you should ask the bank to stop dealings on the account until the matter is resolved

It may be necessary to confirm a request to the bank in writing.

Legal advice may be necessary.


Joint account requiring one signature

This account may have to be frozen (stopped) until a dispute is resolved.

Another option is to ask the bank to issue a “post no debts” status on the account.  The effect of this is that money can be deposited but not withdrawn.

Banks vary in their policies about the above, they may not be required to comply with the request.


Debts

Generally, a person who incurs a debt is responsible for it.

In some cases where two people have incurred a debt jointly (e.g. on a rental lease, hire purchase or credit card) the party recovering the debt may have the right to sue EITHER person for the whole amount.  If you are in this position you will need legal advice.


Children

The Family Court deals with any dispute about children.  Both parents have ‘joint parental responsibility’ for their children.  This can only change by an agreement filed with the Family Court or by an Order of the Family Court.

‘Joint parental responsibility’ is a legal principle that applies to all parents.  It doesn’t matter if they are divorced, married, never married, or never lived together.

Parents who don’t live together need to decide about:

·                Who the children live with;
·                Who will have responsibility for the children’s day to day care,
·                Who will have responsibility for the children’s long term care, and
·                Contact the children will have with the parent they don’t live with.

These can be decided by agreement or by the Family Court if parents cannot agree.

Get legal advice about your rights and options before you start negotiating.  Always seek legal advice before you sign any agreement.


Deceased Estates ­ When a de facto partner dies

The information in this section applies to all de facto couples.


When there is a Will

If a de facto partner dies leaving a will, the property should be distributed by the trustee according to that will.

If a child of the deceased (or grandchild in certain circumstances) has not been provided for in the will they may make an application under the Inheritance (Family and Dependants Provision) Act 1972 (WA) for provision out of the estate.

A surviving de facto partner may make an application under the Inheritance (Family and Dependants Provision) Act 1972 (WA) PROVIDING:

·                They can show that they were living with the deceased immediately before the deceased’s death;
OR
·                They were receiving/entitled to receive maintenance from the deceased at the time of death.

Legal advice should be sought about making an application under the Inheritance (Family and Dependants Provision) Act 1972 (WA).  Applications must be made within 6 months of the Grant of Probate or Letters of Administration.  This time limit may be extended in some circumstances.

Any will made during a previous marriage will remain valid even after divorce (unless remarriage occurs) and a commencement of a de facto relationship.  Making a new will can only change this situation.


When there is no Will

If a person dies without a will, the Administration Act 1903 (WA) sets out how the property should be divided. 

From 1 December 2002 changes to the Administration Act provide for surviving de facto partners in certain circumstances.  People should get legal advice about their individual situation.


Fatal accidents

If someone dies in an accident and the death is “caused by a wrongful act, neglect or default,” the surviving de facto partner can claim damages for the loss of the deceased person’s income under the Fatal Accidents Act.

For a de facto partner to make a claim, you must show that

·                You lived together on a genuine domestic  basis for at least 3 years before the fatal accident, or
·                There is a child of the relationship who was dependant on the deceased at the time of the death.


Workers’ compensation

A person may be able to claim compensation on the death of their partner at work.

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