Protect Assets in a De Facto Relationship | Klarion Law Group

Why This Matters

Many couples live together in committed relationships without marrying. In the eyes of the law, these are known as de facto relationships — and in Australia, they carry similar legal rights and obligations to marriage when it comes to property, finances, and spousal maintenance.

Without proper planning, you could be at risk of losing control over your assets if the relationship ends. At Klarion Law Group, we regularly assist clients in protecting their property, businesses, and inheritances from unintended division.

What Is a De Facto Relationship in NSW?

Under the Family Law Act 1975 (Cth), you are generally considered to be in a de facto relationship if:

• You have lived together for at least two years, or
• You have a child together, or
• You have made substantial contributions (financial or non-financial) to the other person’s property or welfare.

This can apply even if:

• You maintain separate bank accounts
• You don’t jointly own property
• One partner is still married to someone else

What Happens to Assets If You Separate?

If a de facto relationship breaks down, either partner can apply to the Federal Circuit and Family Court of Australia for a property settlement. The court will consider:

• The contributions of each party (financial and non-financial)
• The future needs of each party (age, health, earning capacity)
• The overall fairness of the proposed division

This means assets you owned before the relationship, inheritances, or even business interests could be taken into account.

Steps to Protect Your Assets

1. Consider a Binding Financial Agreement (BFA)

A Binding Financial Agreement is the de facto equivalent of a “prenup” or “postnup”. It can:

• Clearly set out how assets will be divided if you separate
• Protect inheritances, business interests, and property owned before the relationship
• Save you time, money, and stress in the event of a breakup

For a BFA to be valid:

• Both parties must receive independent legal advice
• The agreement must be in writing and signed by both parties

2. Keep Records of Contributions

Maintaining clear records helps establish who contributed what. Examples include:

• Receipts for renovations or evidence of mortgage repayments
• Proof of financial support for children
• Bank statements showing individual payments

These records can make a significant difference if you need to prove your contributions in court.

3. Maintain Separate Property Where Appropriate

If you own property before the relationship, consider:

• Keeping the title solely in your name
• Avoiding joint mortgages unless necessary
• Keeping rental income or investment returns in separate accounts

While not foolproof, this can strengthen your claim that the property should remain yours.

4. Protect Your Business

If you own a business:

• Keep detailed financial records
• Avoid blending business and personal accounts
• Consider a shareholder or partnership agreement that addresses relationship breakdown scenarios

5. Update Your Will and Estate Plan

De facto partners have rights to challenge a Will under NSW family provision laws. If you want to ensure your assets pass according to your wishes, update your:

• Will
• Enduring Power of Attorney
• Superannuation death benefit nominations

Common Misconceptions

“We’re not married, so my assets are safe.”

In Australia, de facto partners can have the same property rights as married couples.

“If their name isn’t on the title, they can’t claim it.”

The court can still consider it part of the relationship property if contributions were made.

“We’ve only been together a short time, so there’s no risk.”

The two-year rule has exceptions — such as having a child together or making substantial contributions.

Case Example – Hills District

(Names changed for privacy)

Michael owned an investment property in Baulkham Hills before moving in with his partner, Emma. Over three years, Emma contributed to mortgage repayments and renovations. When they separated, Emma successfully claimed a share of the property’s increased value — even though her name was never on the title. A properly drafted Binding Financial Agreement from the start could have prevented this outcome.

When to Seek Legal Advice

• Before moving in together
• When buying property during the relationship
• If you’re receiving a large inheritance or windfall
• After a significant change in financial circumstances

Key Takeaway

In NSW, de facto relationships can have serious legal and financial consequences. Taking proactive steps — such as a Binding Financial Agreement, good record-keeping, and updating your estate plan — can protect your assets and reduce future disputes.

Next Steps

• Book a confidential consultation with Klarion Law Group to discuss your options
• Protect your property, business, and future financial security
• Avoid costly disputes later with clear, proactive planning

Disclaimer: The information in this article is general in nature and does not constitute legal advice. The laws and processes discussed apply to New South Wales at the time of writing the article and may change over time. Your circumstances may be different, and outcomes can vary depending on your specific situation. You should seek independent legal advice before making any decisions regarding your estate or legal matters.