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When good intentions to marry becomes a complex issue for de facto couples

For most animals, gender is fixed. But for some, the appearance of gender can be fluid or downright misleading.

Meet the Mourning Cuttlefish. This relative of the humble squid can turn its body into a living video display by rapidly expanding and contracting sacs of pigment in its skin, changing colours and patterns at will.

The male cuttlefish uses this clever skill to increase his chances of finding a mate. He will swim between a female and another male cuttlefish, changing his appearance so that he looks like a male to the female, and a female to the male (stopping the other male’s natural attacking instinct).  

Mating success for the male cuttlefish depends on his ability to satisfy two different genders at the one time.

De facto couples who plan to marry are in a similar situation because they need to satisfy two different provisions of the law when they make a Binding Financial Agreement (BFA).

Let me explain.

A financial agreement is used when a couple wants to deal with the distribution of assets after a separation. A BFA can be made at any stage of a de facto or married relationship – before, during or after.

It’s a quirk of the family law legislation that a financial agreement has to be made under a particular section of Act that pertains to the type of relationship.

For example under the Family Law Act 1975 (Cth):

  • Before De facto Relationships is section 90UB;
  • During De facto Relationships is section 90UC;
  • After the Breakdown of a De facto relationship is section 90UD; and
  • Before Marriage is section 90B.

It has been widely believed that a Financial Agreement could not be made under more than one section of the Act.

Therefore couples who were living in a de facto relationship (s 90UC) and who planned to marry (s 90B) could not satisfy both sections of the Act in one agreement. Their only choice was to either make two agreements (doubling the cost) or change their agreement as circumstances changed.

The law has recently tested this concept!

The case of Piper and Mueller [2015] featured a dispute between a de facto couple who had a BFA which was made under both the de facto and marriage provisions (s90UC and s90B).

It was intended that the agreement would cover the couple both whilst in a de facto relationship and also when they married. The couple did not marry and the relationship broke down, resulting in a challenge to the validity of the BFA, on the grounds that two provisions cannot operate at the same time.

The Court held that the BFA was valid, as the de facto provisions were only operative when they were in a de facto relationship and would no longer apply when the couple married. The marriage provisions would come into operation only once they married. This means that the agreement can be binding, as only one provision will be operative at a time. Section 90UC will apply for the time when the couple are in a de facto relationship, being extinguished when the parties marry and causing section 90B to operate.

So what does this mean for me?

It means that de facto couples are permitted to make an agreement under both de facto and marriage provisions of the Family Law Act. This BFA will cover them for their current de facto relationship and if they decide to marry at a later stage. This is because only one provision operates when the parties are in a de facto relationship, and the other will operate when the parties marry.

This is valuable information for couples who wish to be clear about their finances in the event of a breakdown of a de facto relationship and also a marriage.

Key Points to Consider

  1. Before entering into a BFA, it is important to seek legal advice. In fact, it is a requirement for each party to receive independent financial advice, evidenced by a certificate, before signing the agreement.
  1. Drafting one BFA covering both circumstances (de facto partnerships and marriage) is efficient as it removes duplication of time and costs.
  1. A financial arrangement under s 90B and s 90UC can exist in the same document as only one operates at a time. However, no current ruling exists for combinations of other provisions.

More Information

Click here to learn more about a Combined De Facto Agreement

 


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