When you’re in a de facto relationship, it’s important to understand your legal rights and take proactive steps to protect your assets.

While this might not be something couples often think about, many Australians in de facto relationships may not realise the financial impact if the relationship ends. If you own a business or have significant assets, protecting your wealth becomes even more important. 

Your de facto partner may have legal entitlement to a share of your assets, including property, vehicles, superannuation, or even your business. This can be especially concerning for individuals with complex finances or children from previous relationships. Without proper planning, the division of assets can lead to financial strains in the event of a separation.

At Allied Business Accountants, we’re here to help you guide how to protect your assets in a de facto relationship and keep your wealth secure. 

What is a De Facto Relationship?

In Australia, the law recognizes a de facto relationship when certain conditions are met. These include living together for at least two years, having a child together, or combining finances, such as sharing bank accounts, owning property jointly, or contributing to each other’s financial wellbeing.

Know Your Rights and Assets in a De Facto Relationship 

If you separate from your de facto partner, they may have the same legal rights as a married spouse. This means they could be entitled to a portion of your assets, such as property, vehicles, superannuation, or even your business.

Dividing assets after a breakup can be complicated, especially if you don’t have an agreement in place. Your de facto partner can make a claim on your assets for up to two years after the separation. This can impact your financial security and may even affect any inheritance you want to leave for your children. It’s important to understand these rights to protect your wealth.

Why Consider Setting Up a Binding Financial Agreement? 

One effective way to protect your assets in a de facto relationship is by creating a Binding Financial Agreement (BFA), also known as a prenuptial or cohabitation agreement. This is a legal document that decides how assets will be divided if your relationship ends. A BFA can cover all types of assets, including property, superannuation, and spousal maintenance. 

A BFA is especially helpful if you have children from a previous relationship. It ensures your assets are shared according to your wishes, protecting your children’s financial future. Having a BFA in place can give you peace of mind and help avoid future disputes.

The Benefits of Setting Up a Trust 

Another way to protect your assets in a de facto relationship is by setting up a trust, such as a discretionary trust. This type of trust allows the trustee to decide who gets the benefits from the trust’s assets, offering flexibility in how your assets are managed and distributed. While courts have wide powers to examine trust arrangements in family law proceedings, in certain circumstances, if setup properly can protect certain assets from being claimed by a de facto partner. 

A discretionary trust can also offer tax benefits and help protect business owners. It ensures your assets are managed the way you want but should not be seen as an alternative to a BFA. 

Picking the Right Approach to Protect Your Assets  

When considering protecting assets in a de facto relationship, it’s important to choose the best option for your specific situation. Making the right decision will help safeguard your assets, whether in the event of separation or other financial uncertainties. Here’s how to approach it:

1. Evaluate Your Situation: What assets do you need to protect? Do you have a business, property, or substantial savings involved? Knowing what you need to protect will help you choose the right approach. If you have valuable assets or complex finances, taking steps early is key.
2. Consider a Binding Financial Agreement: If you have specific wishes about how your assets should be distributed, a BFA can provide a solid legal framework. This is especially important if you have children from a previous relationship or specific wishes about asset distribution. A BFA ensures your plan is legally enforceable, offering protection for your assets and financial future.
3. Think About Setting Up a Trust: If you want more flexibility and benefits, setting up a discretionary trust might be a good option. A trust provides you with control over your assets, allowing you to decide who benefits from them.

Expert Asset Protection for De Facto Relationship

At Allied Business Accountants, we understand that protecting your assets in a de facto relationship is important but it can be complex. We offer expert advice on setting up trusts and creating a Binding Financial Agreement to ensure your plan is both cost-effective and works for your specific needs. 

Our team can guide you through the process and help you decide whether a trust or a BFA is the right choice for you. We’re here to support you through every step of the process, with clear guidance and professional service to help protect your wealth and secure your future. 

Ready to Protect Your Assets?

Don’t risk your financial security. Ensure you fully protect your assets in a de facto relationship with the right plan. Safeguarding your wealth is crucial, especially if you own a business, property, or have significant savings. Contact Allied Business Accountants today on +61 39097 4050 to find out how we can help you in setting up a trust or provide guidance on creating a binding financial agreement.