Do I Need to Be Protecting Assets in a De Facto Relationship?

When you’re in a de facto relationship, it’s essential to understand your rights and take steps to protect your assets. While it may not be top of mind for happy couples, many Australians in de facto relationships may not realise the potential financial implications if the relationship ends. If you’re a business owner or entrepreneur, safeguarding your assets becomes even more important. 

At PCR Accounting & Advisory, we’re here to break down the key considerations for protecting assets in a de facto relationship and how to ensure your wealth is secure.

Understanding Your Rights in a De Facto Relationship

A de facto relationship is legally recognised in Australia if you’ve been living together for at least two years, have a child together, or have combined your finances and lives in a significant way. When it comes to separating assets, a de facto partner may have the same rights as a married spouse, which means they could be entitled to a share of your assets, including property, vehicles, superannuation, and business interests.

Splitting Assets in a De Facto Relationship

A de facto asset split can become complex. It’s important to know that from the date of separation, a de facto partner has up to two years to finalise any claims for splitting assets in a de facto relationship. This could potentially lead to an asset split that impacts your financial security or the inheritance you wish to leave to your children.

Why Consider a Binding Financial Agreement?

One way to protect your assets in a de facto relationship is by setting up a binding financial agreement (BFA). Also known as a prenuptial or cohabitation agreement, a BFA is a legally binding document that outlines how assets will be divided if the relationship ends. This agreement can cover all types of assets, including property, superannuation, and spousal maintenance.

A BFA is particularly useful if you have children from a previous relationship. It ensures your assets are allocated as you wish, protecting your children’s future financial position. Having a clear plan in place for de facto relationship asset protection can give you peace of mind and help avoid potential disputes down the line.

The Flexibility of Setting Up a Trust

Another strategy for protecting assets in a de facto relationship is to establish a trust, such as a discretionary trust. This type of trust allows the trustee to decide who receives the benefits from the trust’s assets. It’s a flexible option for de facto relationship asset protection as it can safeguard assets against creditors and offers more adaptability than a binding financial agreement.

A discretionary trust can also provide tax benefits and protection for business owners. It ensures that your assets are managed according to your wishes and can be a great alternative to a BFA, especially for those looking for a more dynamic approach to safeguarding their wealth.

Choosing the Right Strategy for Protecting Assets in a De Facto Relationship

When considering protecting assets in a de facto relationship, it’s crucial to choose the strategy that best suits your needs. Here’s how you can decide:

1. Evaluate Your Situation: Understand the value and types of assets you want to protect. Are there business interests, property, or substantial savings involved? Knowing what you want to safeguard will help you choose the right protection strategy.
2. Consider a Binding Financial Agreement: If you have specific wishes for how your assets should be divided, especially if children from a previous relationship are involved, a BFA can clearly outline these plans and offer legal protection.
3. Look into Setting Up a Trust: If you’re looking for flexibility and additional benefits, a discretionary trust might be a more suitable option. Trusts can provide asset protection against creditors and give you control over who benefits from your assets.

Expert Assistance with De Facto Relationship Asset Protection

At PCR Accounting & Advisory, we understand that protecting your assets in a de facto relationship is a complex and sensitive matter. We offer expert advice on setting up trusts, ensuring they are cost-effective and tailored to your unique situation. 

Our team can help you determine whether a trust is the right option for you or if a binding financial agreement is more suitable. We’re here to guide you every step of the way, providing clear communication and professional service to help you protect your wealth and secure your financial future.

Ready to Protect Your Assets?

Don’t leave your financial security to chance. Protect your assets in a de facto relationship with the right strategies in place. Contact PCR Accounting & Advisory today on 03 9847 7516 to see how we can assist you in setting up a trust or provide guidance on creating a binding financial agreement.

Disclaimer: This blog post is for informational purposes only and should not be considered as financial or legal advice. Consult with a qualified professional for personalised guidance based on your specific circumstances.