For couples in de facto relationships, it’s essential to consider the unique financial implications that come with your relationship. At Knight, we understand the importance of planning for a secure future together, no matter the type of relationship you are in. Let’s explore five key considerations to keep in mind when navigating financial planning for de facto relationships.
Understanding De Facto Relationships
A de facto relationship is defined as a couple living together on a genuine domestic basis but not married or in a civil union. In Australia, de facto couples have many of the same rights and obligations as married couples, which means financial planning is just as important to ensure you’re both protected. Understanding your shared goals and values is crucial when it comes to financial planning for de facto relationships.
Open communication about your financial expectations and concerns will help you establish a solid foundation for a secure future together. Discussing your long-term financial objectives and priorities can strengthen trust and understanding between partners, leading to more effective decision-making.
Protecting Your Assets
Asset protection is a critical aspect of financial planning for de facto couples. In the event of a separation, assets may be divided between partners, regardless of whose name they are in. To protect your assets, consider entering into a legally binding financial agreement, such as a cohabitation agreement.
These agreements can outline how assets will be divided in the event of a relationship breakdown and help avoid potential disputes. It’s essential to seek legal advice when drafting these documents to ensure they are fair and enforceable.
Establishing Financial Boundaries
Establishing financial boundaries is another essential aspect of financial planning for de facto relationships. This may involve setting up separate bank accounts or creating a joint account for shared expenses. Discussing your financial expectations and boundaries will help you both feel more secure and avoid potential conflicts down the road.
Creating a budget together can also be a valuable tool in managing your finances as a couple. By agreeing on spending priorities and working towards shared financial goals, you can strengthen your partnership and avoid potential disagreements.
Tax Implications and Relevant Legislation
The Family Law Act 1975 (Cth) recognises de facto relationships, and the legislation applies in the event of separation or divorce. This means your financial agreements, asset division, and other aspects of your relationship will be subject to the provisions outlined in the Act. Understanding the legal framework surrounding de facto relationships can help you make more informed decisions about your financial future.
Planning for the Future
Planning for the future is an essential aspect of financial planning for de facto couples. Consider creating a will to ensure your assets are distributed according to your wishes in the event of your passing. Additionally, planning for retirement as a couple is crucial to ensure you both enjoy a comfortable future together.
By working with a financial adviser, you can develop a comprehensive retirement plan that considers both partners’ financial needs and goals. This may include strategies for maximising superannuation contributions, investing in property, or exploring other wealth-building opportunities.
Financial planning for de facto relationships requires careful consideration of various aspects to protect both partners and build a secure future together. By understanding your rights and obligations, protecting your assets, establishing financial boundaries, navigating tax implications, and planning for the future, you can create a solid foundation for your relationship to thrive.
For financial advice that’s focused and committed to delivering you results, contact Knight.
