De facto couples are ‘risking financial ruin’

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co-habitation-agreementsDE FACTO couples are being advised to draw up “domestic relationship agreements” or risk financial ruin if their partnership breaks down.

Family lawyers say a growing number of men and women who split from long-term partners are losing out because they are not entitled to the same legal protection as married couples.

Most are unaware of the “cohabitation trap”, in which their legal rights change automatically after two years or if they have a child together.

This can result in a single mother being deprived of financial compensation for the future or a de facto making a claim on a property or asset owned entirely by their partner.

Census figures show 76 per cent of Australian couples have lived in de facto relationships.

Jackie Vincent, a partner in Watts McCray, Australia’s largest specialist family law firm, told The Sunday Telegraph couples needed to be more aware of the potential legal pitfalls of de facto relationships.

Most are unaware of the “cohabitation trap”, in which their legal rights change automatically after two years or if they have a child together.

“We need to get people to understand what their life choices mean,” she said.

“Choose to live your life how you want to live it, but be aware of the consequences.  We do see a lot of de facto couples and we think: ‘Do they really realise what they’re getting into?’

“It’s traumatic for them when you say to them their partner could have a claim on their house.”

Ms Vincent described “domestic relationship agreements” as being similar to pre-nuptial contracts for married couples, specifying exactly how assets and money should be awarded to protect each partner in the event of a separation.

Mothers were usually the biggest losers in de facto break-ups because they received less in separation settlements than married women, she said.

Sydney couple Paul Cassat, 30, and his partner Alicia Twohig, 25, have lived together for two years.

“We bought (property) together and we have nominated each other as equal beneficiaries,” Mr Cassat said.

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Categories: Binding Financial Agreement, Domestic Relationship Agreements
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