What happens to my finances if I split up with my de facto partner or spouse?
When it comes to separating from your de facto partner or spouse, you will need to make arrangements to divide everything; from the family home, cars, household and personal items, to investments and debts either jointly held or in your own name.
Preferably, you’ll want to make these arrangements without the need for court and lawyers. If you cannot reach an agreement, then they will need to be settled before the courts.
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 two 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 separates or divorces, 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. However, since 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 will also need to be reviewed if you have lodged a ‘binding nomination’. This is a legally binding statement which outlines how you want your super and associated payments distributed if you die.
If you have seperated and you partner was named in the binding nomination, the nomination becomes invalid and reverts to a non-binding nomination (one where the trustee has discretion to distribute your assets).
Should you wish for the binding nomination to continue, you will need to contact the trustee of your super fund or speak to your financial advisor.