What happens to my finances if I split up with my de facto partner or spouse?
If you separate from your spouse or de facto partner, you will need to make arrangements to divide your joint property. This includes all assets held in joint or separate names such as the family home, cars, household and personal items, investments and superannuation plus any debts such as mortgage debt, personal loans and money owing on credit cards.
If the split is amicable, you can choose to divide your property yourselves without the involvement of a court, or if you are unable to agree then you can apply to a court for financial orders regarding the division of your property.
What factors define a relationship as de facto?
A de facto relationship is defined as a relationship where two people who are not married to each other are living together as a domestic couple.
If a de facto couple separates, a claim to the courts for property settlement or maintenance will depend on at least one of four criteria being satisfied:
- The relationship lasted at least 2 years
- There is a child as a result of the relationship
- The relationship is registered under state or territory law
- One party made significant contributions and failure to make an order would result in a serious injustice.
What are the implications for life insurance or superannuation?
If a married or de facto couple separate or divorce, any life insurance or superannuation held by either party is also considered to be property and can be divided by agreement or by court order.
But because super is held in trust, unlike other forms of property, it is subject to rules regarding when it can be accessed. So even if divided, such an asset may not be accessible to either party until a condition of release can be satisfied.
Binding and nonbinding beneficiaries: how these need to be managed if a separation happens
Life insurance held inside super will also need to be reviewed if you have lodged a binding nomination with the trustee. This is a legally binding statement which outlines how you want your super and associated insurance payments distributed if you die.
If your spouse or de facto partner was named in the binding nomination as a beneficiary and you have since separated or divorced them, your binding nomination becomes invalid and reverts to a non-binding nomination (one where the trustee has discretion as to how your assets are distributed).
So if you wish your ex-spouse or de facto partner to continue to be a beneficiary of your super death benefit, you will need to contact the trustee of your super fund or speak to your financial advisor.