Speaker 1: Just before we get started, we'd like to acknowledge and
Speaker 1: pay respect to Australia's Aboriginal and torrest Rate islander peoples.
Speaker 1: They're the traditional custodians of the lands, the waterways and
Speaker 1: the skies all across Australia. We thank you for sharing
Speaker 1: and for caring for the land on which we are
Speaker 1: able to learn. We pay respects to elders past and present,
Speaker 1: and we share our friendship and our kindness.
Speaker 2: She's on the Money, She's on the Money. Hello, and
Speaker 2: welcome to She's on the Money, the podcast for millennials
Speaker 2: who want financial freedom. In twenty twenty, almost seventy nine
Speaker 2: thousand marriages were registered in Australia and over forty nine
Speaker 2: thousand divorces were granted. While we've dedicated an episode in
Speaker 2: the past to safeguarding our finances in the event of
Speaker 2: a divorce, one of the topics we yet to have
Speaker 2: properly untangled is that of de facto relationships. What happens
Speaker 2: if I split with my partner who lives with me
Speaker 2: in the house that I own, How will my super
Speaker 2: be impacted should we split, and most importantly, how can
Speaker 2: I make sure my finances are protected? My name is
Speaker 2: Georgia King, and joining me to help answer these questions
Speaker 2: and plenty more is financial advisor Victoria Divine.
Speaker 3: The Today we're.
Speaker 2: Talking about the financial implications of de facto relationships. Why
Speaker 2: do you think we need to be talking more openly
Speaker 2: about this topic in a financial.
Speaker 3: Context, because at the end of the day, ge de
Speaker 3: facto actually here in Australia nowadays has exactly the same
Speaker 3: rights that a married couple would have, but literally the name.
Speaker 3: So I think it's really really important to have this
Speaker 3: conversation because unfortunately you could be accidentally de facto, Like
Speaker 3: that would be a really good podcast series, like accidentally
Speaker 3: de facto and it's talking about all these boys who
Speaker 3: were like not wanting to come in, but then you're
Speaker 3: living with them for like three years and you're like
Speaker 3: hashtag accidentally de facto.
Speaker 2: Yeah, I love the accident to facto. What I don't
Speaker 2: know that we tried, you tried, thank you.
Speaker 3: But at the end of the day, if you're legally married,
Speaker 3: or you're in a registered relationship, which is where you've
Speaker 3: literally gone and registered the relationship with the Registry of Birth,
Speaker 3: Deaths and Marriages, which did you know you could do that?
Speaker 3: Bit you didn't know you could do that. Absolutely not No,
Speaker 3: you can register your relationship, but you could actually just
Speaker 3: be accidentally de facto and living with a partner and
Speaker 3: you just didn't know that that's how you were categorized
Speaker 3: until you break up and you realize, oh my gosh,
Speaker 3: I was de facto and I have these rights or
Speaker 3: vice versa. They come for you for something you oh,
Speaker 3: and you're like, no, we were never de facto, but
Speaker 3: legally you were. So it can be a little bit scary,
Speaker 3: and being in a de facto relationship actually just means
Speaker 3: that you're in a relationship that is legally binding. That's
Speaker 3: a scary word when you make it that serious. Hey,
Speaker 3: I would say so, so g A de facto relationship
Speaker 3: is also legally binding in the event of a breakup,
Speaker 3: which is why we're talking about it today. And this
Speaker 3: means that you essentially have legal entitlements and rights if
Speaker 3: your relationship ends. So we are here surprised to talk
Speaker 3: to you today about what that means, how that works,
Speaker 3: owning assets, getting rid of assets, getting rid of a
Speaker 3: partner if you don't want them, and how to protect
Speaker 3: yourself because from my perspective, that is the most important
Speaker 3: thing you can do for yourself financially.
Speaker 2: Is de facto in quotetion marks the same in each state?
Speaker 2: Or do we have different definitions all over the shop?
Speaker 3: Yes, sir, but the family law that actually governs de
Speaker 3: facto relationships are slightly different in WA. So I do
Speaker 3: apologize for all my friends over there. As always, you
Speaker 3: guys know that everything we say on this podcast is
Speaker 3: general advice, and if you're in this sticky situation, you
Speaker 3: need to get advice. But essentially the biggest difference is
Speaker 3: around superannuation and being able to split that up. And
Speaker 3: in every state and territory except for WA, you are
Speaker 3: able to request half your partner super whereas in WA
Speaker 3: it's actually protected. So say you were married for like
Speaker 3: thirty years and then you go, you know what, we're
Speaker 3: going our separate ways. But you were a homemaker for
Speaker 3: that entire period of time and your partner was like,
Speaker 3: I don't know, fi fo and making bank and you know,
Speaker 3: has this epic superbalance that is more than enough to
Speaker 3: set you both up for life and for retirement. You're
Speaker 3: actually not entitled to that, wild right?
Speaker 2: Hang on? Hang on?
Speaker 3: Was that WA or every other state? WA? Oh? Just
Speaker 3: Western Australia interesting, so every other state is up to
Speaker 3: date on it except for Western Australia. I mean, there's
Speaker 3: a case for that because some people would be like,
Speaker 3: my super yeah, it's mine, etc. Et cetera. But if
Speaker 3: you really want to get into the conversation about sacrifice,
Speaker 3: relationships are not all about financial contributions. It's about sacrifice
Speaker 3: and it's about equity exactly. Financial equity and equity isn't
Speaker 3: just financial. And we did an entire podcast on this
Speaker 3: because I am wildly passionate about making sure that women
Speaker 3: in particular know their rights and also know what they're
Speaker 3: giving up. And this is why I'm so passionate about
Speaker 3: talking to you partner about well, are you going to
Speaker 3: contribute to my super while I'm or mattlee Because at
Speaker 3: the moment, matt leave doesn't include superannuation, So you're taking
Speaker 3: a step back so your family can take a step forward,
Speaker 3: but you're taking a step back financially. When shouldn't that
Speaker 3: be a burden that both parties in the relationship carry.
Speaker 2: So before we get into the thick of things, let's
Speaker 2: start by defining what de facto means, what types of
Speaker 2: de facto relationships exist? Fd in case you're accidentally de
Speaker 2: facto g correct monto. So, a de facto relationship is
Speaker 2: when two people who are probably in love but they
Speaker 2: don't have to be, but they're not married. They live
Speaker 2: together or they live together as a couple on a
Speaker 2: genuine domestic basis. As the definition is quite broad, and
Speaker 2: when there is actually a dispute over property, assets or
Speaker 2: partner support, it goes to court. The court is actually
Speaker 2: going to look at a few things, and I think
Speaker 2: that's worthy of bringing up right here. So they'll look
Speaker 2: at one of three things. Firstly, that the couple was
Speaker 2: in a de fact relationship for at least two years
Speaker 2: or gee a child was born during their de facto relationship.
Speaker 2: They will also look at the couple having lived at
Speaker 2: least a third of their de facto relationship together in
Speaker 2: Australia other than in Western Australia. Again, they have a
Speaker 2: few different rules and regulations, and the couple separated after
Speaker 2: the first of March two thousand and nine. Okay, new rules,
Speaker 2: weird flex but okay, family Court. So just to be
Speaker 2: really clear here, we're not talking housemates. There has to
Speaker 2: be some kind of romantic entanglements commitments, Yes.
Speaker 3: And usually that's a sexual relationship. So there's a few
Speaker 3: things that they'll consider. They'll consider how long the relationship lasted,
Speaker 3: if you two lived together, and for how long you know.
Speaker 3: They might look at it and be like, mate, you
Speaker 3: had separate bedrooms, you didn't have sex, you had separate
Speaker 3: you know, lease agreements, etcetera, etcetera. You were basically housemates,
Speaker 3: So you're not going to fall into this trap with
Speaker 3: your housemate. Don't get too scared. They will look at
Speaker 3: whether you were financially depend on each other and any
Speaker 3: other types of arrangements you might have had between the
Speaker 3: two of you for financial support. They might look at
Speaker 3: property and see how it was owned and also how
Speaker 3: it was used and how you came to own it.
Speaker 3: So they might go, all right, well, G that came
Speaker 3: from an inheritance, or G. You owned that way before
Speaker 3: meeting them, or G. That person let you save while
Speaker 3: you lived together by them paying more rents so you
Speaker 3: could save for a property. So there are lots of
Speaker 3: different factors in the property ownership side of things. They
Speaker 3: will look at whether you had quote a commitment to
Speaker 3: a shared life together. They'll look at how you cared
Speaker 3: and supported for any children that you had, and they'll
Speaker 3: also look at how other people saw your relationship. It's
Speaker 3: spasif how do they do that? So they actually might
Speaker 3: audit your social media. They can go through they can
Speaker 3: get photos of you together. In situations I've seen where
Speaker 3: people are applying for like residency here in Australia, I
Speaker 3: know they've been asked to prove their relationships because it's
Speaker 3: actually not uncommon for people to apply as like oh
Speaker 3: i'm her waf yeah ha ha haa, please let me
Speaker 3: into the country, like prove it. So they might ask
Speaker 3: for pages and pages and pages of WhatsApp messages, or
Speaker 3: they might ask for photos of you together or anniversary photos,
Speaker 3: and most legitimate relationships gee have some kind of photographic
Speaker 3: or paper trail, like there's stuff you've done together. It
Speaker 3: might have been a webjet dot com don a you
Speaker 3: booking where you both just flying to Tazzi together, but
Speaker 3: that was like a trip you did together as a couple,
Speaker 3: So it could be small. But they might actually go, hey,
Speaker 3: how'd your friends and family see that? Can we interview them?
Speaker 3: Because that happens, so we have skipped straight to the
Speaker 3: messy breakup here. But so being like hey, Georgia King,
Speaker 3: could you please come in and tell us how you
Speaker 3: saw Victoria and Steven's relationship. I would have glowing things
Speaker 3: to say, thank you, but you would tell them that
Speaker 3: we were in fact in a relationship, right or well,
Speaker 3: I don't know what you would say. Maybe you'd be like,
Speaker 3: but I was in the relationship.
Speaker 2: Hello, it's me exactly what I wanted to talk about here.
Speaker 2: V is something we talk about all the time that
Speaker 2: she's on the money. And that's how integral it is
Speaker 2: to have open and honest conversations with our partner. Absolutely,
Speaker 2: especially if we are in this de facto situation, this accidental,
Speaker 2: de facto situation, de facto exactly.
Speaker 3: I'm bringing it. I'm getting on board with it. I'm
Speaker 3: not mad. So tell me more about why it's so
Speaker 3: important in this context. It's so important because you could
Speaker 3: be compromised at the end of the day. We need
Speaker 3: to be very clear about who owns what and when
Speaker 3: and where. And I know that it's not a conversation
Speaker 3: you want to have, like no one wants to fall
Speaker 3: deeply in love and then have things questioned like no
Speaker 3: one expects to, you know, spend arguably, what's the average
Speaker 3: I think it's thirty six thousand dollars here in Australia
Speaker 3: is the average cost of a wedding. You don't spend
Speaker 3: that amount of money going you know what, I'm going
Speaker 3: to get married to g King, spend my thirty six
Speaker 3: grand and DIVORCEO three years later. That is never the intention.
Speaker 3: So that's the thing that makes people feel a bit
Speaker 3: icky when they want to go, oh hey gee, so
Speaker 3: you know if we broke up, what would this mean?
Speaker 3: Like that should always be a conversation that you have.
Speaker 3: And I know it probably sounds like a bit too much,
Speaker 3: but it should be exactly how we approach conversations, regardless
Speaker 3: of whether it's financial or not. If you're making a
Speaker 3: big life decision, I think that we should be having
Speaker 3: open honess conversations with your partner. And I probably take
Speaker 3: this a step too far because when I got my cat,
Speaker 3: I was like, hey, cool, so see this cat that's
Speaker 3: mine if we break up and se was like, oh, okay,
Speaker 3: you can have any I'm not going anywhere, and I
Speaker 3: was like, great, no problems. Same thing happened with the dog.
Speaker 3: I was like, I'm going to get this dog and
Speaker 3: if things don't work out between the two of us.
Speaker 3: I'm just letting you know that that is something that
Speaker 3: is mine. Let's agree to it now. I'm sure he'd
Speaker 3: argue with me now because it's very easy to say no,
Speaker 3: that's absolutely fine Victoria before he was in love with
Speaker 3: the puppy. But I think it's so important to have
Speaker 3: these conversations. And it's not to say that we can't
Speaker 3: revisit that conversation and renegotiate those terms, but we need
Speaker 3: to be having those conversations about everything financial because if
Speaker 3: you're coming to the relationship with the house, or you're
Speaker 3: coming to the relationship with I don't know, gee, you're
Speaker 3: a little snap. What if you got in this brand
Speaker 3: new relationship and the partner that you got was just
Speaker 3: not good at saving and your plan was to purchase
Speaker 3: a home. Is that then their home or is that
Speaker 3: your home? Have you had that conversation? And if not,
Speaker 3: I would be having that conversation because it's really unfair
Speaker 3: for them to then assume all I thought we were
Speaker 3: doing it together, and in court that's what they'll say. Yeah,
Speaker 3: they'll go, oh, but like G and I were in
Speaker 3: such a loving relationship, and you know, we never talked
Speaker 3: about it because everything we did we did together because
Speaker 3: we were so in love. So we bought this house
Speaker 3: together because to them, you brought the money to the table,
Speaker 3: but they were so invested on that journey. And I
Speaker 3: think you really need to draw the line, regardless of
Speaker 3: how icky that can feel, because it can actually be
Speaker 3: really liberating. And I think that a lot of people
Speaker 3: are viewing this from the lens of oh yeah, that's
Speaker 3: so yuck, like I don't want to have this conversation
Speaker 3: to my partner. But nobody ever gets in a relationship
Speaker 3: with the intention of breaking up. Nobody ever gets in
Speaker 3: a relationship with the intention of losing an asset they
Speaker 3: worked their life for. No one intends to, you know,
Speaker 3: have these really bad outcome But do you know what's
Speaker 3: really empowering knowing every single day what I owe, what
Speaker 3: I earn, what I spend, and what I own, and
Speaker 3: knowing that the relationship I'm in I'm choosing to be
Speaker 3: in not I'm so confused financially about what would happen if,
Speaker 3: oh well, if I ask Steve for a breakup, like
Speaker 3: what would he take? What would I take? Like I
Speaker 3: always know where I'm standing, and I always know exactly
Speaker 3: what I can take from that relationship, and I think
Speaker 3: everybody else should too.
Speaker 2: In terms of cementing this though, be because I'm sure
Speaker 2: people would have conversations in the early days of their relationship.
Speaker 2: You've said, you shotgun Henry. I should the worst happen,
Speaker 2: you can have the house, you can have the car.
Speaker 2: I just want the pets. Do you have that in writing, though,
Speaker 2: because surely Steve could dispute that if it wasn't written
Speaker 2: down no evidence.
Speaker 3: He could absolutely dispute that. I'm more referencing that because
Speaker 3: I'm like, it's important to have these conversations so that
Speaker 3: you're always on the same page. But we did an
Speaker 3: episode on binding financial agreements not that long ago, and
Speaker 3: if you're interested in having that conversation, definitely do it.
Speaker 3: T LDR. I do have a binding financial agreement with
Speaker 3: my partner because it was really important to me, Like,
Speaker 3: I can't just talk the talk, I've got to walk
Speaker 3: the walk. One hundred Okay, very interesting.
Speaker 2: I'm gonna put a little little peg in the chat,
Speaker 2: a peg in the check peg it right here, and
Speaker 2: then I BUMI the other side of the break. We
Speaker 2: will be getting into the nitty gritty of different kinds
Speaker 2: of scenarios, So please don't go anywhere, guys already, let's
Speaker 2: dive into a few situations here about how my relationship
Speaker 2: is going to affect or be affected in certain situations. Genius,
Speaker 2: let's start with some role play again. Well, maybe I
Speaker 2: don't know how things will go. See that's a good
Speaker 2: part of relationships. Moving on, Saucy, let's start with Centerlink.
Speaker 3: Gee, I can't stop laughing. But if you are a
Speaker 3: member of a couple, then it can actually affect what
Speaker 3: payments you get and your payment rate, which is why
Speaker 3: during university you probably had a lot of conversations about
Speaker 3: people being like Central Link think, so I'm single, and
Speaker 3: I say that because I feel like every second friend
Speaker 3: I had at Uni was single and living with their
Speaker 3: housemate and sharing a quote room because it made the
Speaker 3: most financial sense to them. And I guess that's usually
Speaker 3: our very first experience of what de facto looks like
Speaker 3: and how it impacts us, and how that can actually
Speaker 3: drag us down in a way, because if we are
Speaker 3: de facto, our joint income is taken into consideration, and
Speaker 3: sometimes that means that you don't get access to benefits
Speaker 3: when really you should be getting access to benefits because
Speaker 3: the de facto your relationship you're in is maybe new,
Speaker 3: or maybe you're just both really young and you don't
Speaker 3: want to be financially dependent on one another because situations
Speaker 3: are so different. I'm absolutely not advocating for lying to sendslink.
Speaker 3: I don't think anyone should do it, but it would
Speaker 3: be a miss of me to not recognize that a
Speaker 3: lot of people do, I guess quote gameless system because
Speaker 3: it makes sense for them. Definitely not saying we should
Speaker 3: do that. Moving on from that, Centilling generally consider you
Speaker 3: a couple if you are one of the following quote
Speaker 3: you have a partner, are married, in a registered relationship,
Speaker 3: or you are de facto. You don't even necessarily need
Speaker 3: to be living together for Sentilling to actually consider you
Speaker 3: a couple, which sucks. But you might need to let
Speaker 3: sentlingk know of your relationship status to make sure everything
Speaker 3: is hunky dory. So I won't go over it too
Speaker 3: much G But many of the way Sentilling considers whether
Speaker 3: you're in a de facto relationship or not is exactly
Speaker 3: the same way that the family courts would do that,
Speaker 3: and we describe that in the first half of the episode.
Speaker 3: But there are a few different rules. So first different
Speaker 3: rule is if you are twenty one or younger and
Speaker 3: getting the ABS, Study Living Allowance or youth allowance as
Speaker 3: a student, or you are getting the Australian Apprentice Payment,
Speaker 3: or you are twenty one and younger and getting youth
Speaker 3: allowance as a job seeker, or you are twenty one
Speaker 3: and getting a disability support pension. So all of those
Speaker 3: things are treated a little bit differently, but important to
Speaker 3: understand that it really does affect your payments, which, as
Speaker 3: I said before, or can be a little bit of
Speaker 3: a kick in the guts if you're at UNI and
Speaker 3: you're studying and you just really need the cash to
Speaker 3: get by.
Speaker 2: Interesting, you said that even if you're not living together,
Speaker 2: it can impact your finances.
Speaker 3: As well well. Absolutely, because remember how we said if
Speaker 3: you're financially dependent on one another, or your inter sexual
Speaker 3: relationship or you're romantically involved, like you don't necessarily have
Speaker 3: to live with a person to think that they're your
Speaker 3: one and only do you. Let's move on to assets here,
Speaker 3: V say you and I get married, I should be
Speaker 3: social lucky, I should be so fucky. Half a move over?
Speaker 3: What would you say the difference is between a pre
Speaker 3: marital asset and a combined asset. I feel like they're
Speaker 3: a little bit straightforward. Pre marital, pre marriage, pre relationship.
Speaker 3: So pre marital assets are properties or assets that were
Speaker 3: bought by a party before they got into the marriage
Speaker 3: or before they got into a de facto relationship. The
Speaker 3: asset might be in the form of real estate or
Speaker 3: shares or bank deposits or any type of financial assets.
Speaker 3: And then combined assets are classified as property owned by
Speaker 3: you and your partner, So that doesn't necessarily mean that
Speaker 3: a pre marital asset can't become a joint asset. Depending
Speaker 3: on the conversations or the situation that you're in, that
Speaker 3: either means that you own something directly with your partner
Speaker 3: or you come to acquire something while in that relationship
Speaker 3: in your individual name, which then goes into what's known
Speaker 3: as a g Are you ready for this? A matrimonial asset? Pool? Well,
Speaker 3: fun fun pool, fun pool, let's go swimming. But these
Speaker 3: can include things like the family home you buy, any
Speaker 3: other real estate you might buy, cash, cars, other vehicles, investments,
Speaker 3: and super entitlements. But not in Western Australia, and these
Speaker 3: things aren't limited to just the big things They could
Speaker 3: also be household items like your fancy smag toaster. It
Speaker 3: could be jewelry, it could be a trady boyfriend's tools.
Speaker 3: It could be the value of a business that you
Speaker 3: create in a relationship, which is one of the reasons
Speaker 3: why I was a staunch advocate of a binding financial
Speaker 3: agreement before I got into a relationship being a bit
Speaker 3: personal now g because from my perspective, I was like, Wow,
Speaker 3: I think I'm, you know, onto something here. I'm obsessed
Speaker 3: with she's on the money. I don't think I'm a
Speaker 3: half bad financial advisor. I think that Zella and She's
Speaker 3: on the money. Over the next ten, twenty thirty, hopefully
Speaker 3: fifty years will continue to grow. And I'm not naive,
Speaker 3: like it's not as though I one hundred percent get
Speaker 3: all of that if Steve and I break up, because
Speaker 3: I do genuinely believe he puts a lot into our
Speaker 3: relationship to enable me to grow those things. But I
Speaker 3: want to own those things at the end of the day.
Speaker 3: I don't want him to be my business partner. I
Speaker 3: don't want half the shares to go straight to Steve
Speaker 3: and I end up being in business with my ex
Speaker 3: husband like that would suck, but we really needed to
Speaker 3: define that. So it could be everything, and don't forget
Speaker 3: debt either, g because it could be anything. It could
Speaker 3: be a personal loan that you two get together to
Speaker 3: go on a fancy holiday that you both will like
Speaker 3: super pump to go on. Or it could be that
Speaker 3: one party in the relationship has gambling day and didn't
Speaker 3: tell anyone and got a personal loan and it all
Speaker 3: just racked up from there and they've got a couple
Speaker 3: of credit cards that you didn't know about. Could be
Speaker 3: a shopping addiction. It could be literally anything, but if
Speaker 3: it was made during the relationship, it's very likely to
Speaker 3: be seen as a joint debt, which sucks and gets
Speaker 3: me really on my high horse when we're talking about
Speaker 3: abusive relationships, because as we've seen on Money Diaries, historically
Speaker 3: there have been a number of women, and I'm sure
Speaker 3: it happens to men as well, but on the She's
Speaker 3: on the Money podcast, we've only ever had conversations with
Speaker 3: women about this, But women who have been left with
Speaker 3: massive debts because of their partners and have had to
Speaker 3: pay it off because they were in the relationship, and
Speaker 3: that sucks, and I think that there should be more
Speaker 3: rules and regulations around that, because it is honestly absolute junk.
Speaker 3: But I think it's really important to talk about because
Speaker 3: if you created something in your relationship that's not a
Speaker 3: pre marital asset, just because G did it well she
Speaker 3: was married to V doesn't mean that V didn't again
Speaker 3: put any equity into that asset.
Speaker 2: Yeah, okay, Well on that note, then let's talk about
Speaker 2: how we can protect ourselves and our assets in these situations.
Speaker 3: We have good conversations. Oh, this is a really hard
Speaker 3: one to say because again making this quite personal, because
Speaker 3: the easiest way to describe things is for me to go, hey,
Speaker 3: here's the situation, and the situation I know best happens
Speaker 3: to be my own. But relationships sometimes pop up out
Speaker 3: of nowhere. I totally get that Steve and I met
Speaker 3: and then I think we decided that that was it
Speaker 3: two weeks after we met, like, and that's very nice
Speaker 3: and very exciting, But that doesn't leave a lot of
Speaker 3: wiggle room to have those big conversations. So they came
Speaker 3: laid down the track, and thankfully I was in a
Speaker 3: relationship with someone who's really supportive and really understanding. But
Speaker 3: I think we need to be quite wary of relationships.
Speaker 3: I don't want to scare people. I don't want people
Speaker 3: to be like, oh, biggie, you're right. I never getting
Speaker 3: back on the dating apps. I promise you can find
Speaker 3: someone good on there. Found Steve on there, so you
Speaker 3: know that's one person who's had a very solid experience.
Speaker 3: But having conversations early and having chats with your accountant
Speaker 3: or people who are in your sphere of I guess
Speaker 3: influence to make sure that they know what's up. Like
Speaker 3: if you're buying a house and you know, as we
Speaker 3: use that example before, G wants to buy a house,
Speaker 3: but she gets into a relationship, start talking about that early.
Speaker 3: Don't go on the house hunting journey with your partner
Speaker 3: and go, oh my god, what about this one babe,
Speaker 3: brah rah, get them so invested to then turn around
Speaker 3: and be like, oh, you know, this isn't going to
Speaker 3: be your house, right Like, I'm the one with all
Speaker 3: the money, so obviously that's not going to be yours.
Speaker 3: I think you need to make sure that there are
Speaker 3: really clear boundaries from the beginning. Okay, Hey, I'm g
Speaker 3: I'm going to be buying a house, partner, are you
Speaker 3: okay with that? Understanding their financial situation and the journey
Speaker 3: there on, and making sure that they're complimentary to one another,
Speaker 3: because you might desperately want to own a home, but
Speaker 3: your partner might go, please wait for me, and then
Speaker 3: you make a decision together to wait for them to
Speaker 3: save their part of the deposit, or they might go, oh,
Speaker 3: I don't mind, go buy your own house. That's totally okay.
Speaker 3: Document it. I think people really underestimate the I guess
Speaker 3: value in just documenting things as well. I sound so
Speaker 3: creepy like I'm trying to keep receipts on people, But
Speaker 3: a paper trail, a pay per trail, is really important.
Speaker 3: And regardless of whether you have a binding financial agreement
Speaker 3: or not, you can rely on past communications. So if
Speaker 3: you have been in a situation where you've had that conversation,
Speaker 3: you can just shoot them a quick email and be like, hey,
Speaker 3: just wrapping our conversation. I'm going to be buying a house.
Speaker 3: It's going to be in my name. You aren't going
Speaker 3: to be financially responsible for the mortgage. That means you're
Speaker 3: not going to be financially able to take half of
Speaker 3: it if we should ever break up. And I know
Speaker 3: that that's not very sexy. What I promise being protected
Speaker 3: is you need to be thinking with your head, not
Speaker 3: your heart right and they're conflicting. They don't want the
Speaker 3: same things. They don't know, they don't they never have.
Speaker 3: So let's move on from that.
Speaker 2: All right, they let's talk homelands. I have two scenarios
Speaker 2: for you. The first, you and I.
Speaker 3: Are in a relationship. I'm really pushing this and I'm
Speaker 3: picking up or you are pushing down.
Speaker 2: We're applying for a loan together, yes, and we're going
Speaker 2: to be co contributing to the mortgage.
Speaker 3: Very nice. How does our relationship impact that scenario? Okay,
Speaker 3: so hot take from me is that both of our
Speaker 3: financial circumstances are going to be taken into consideration. In
Speaker 3: that circumstance, that could be my shopping addiction that I
Speaker 3: have and I spend a lot on shoes, and that
Speaker 3: could stop you, who's really good at budgeting and cash flow,
Speaker 3: from being able to access as much money as you
Speaker 3: might want, or even being able to get a loan
Speaker 3: in the first place. So you really need to make
Speaker 3: sure if you're going to get a loan with your partner,
Speaker 3: you're not just you know, on the same page, about
Speaker 3: the outcome. But you need to be on the same
Speaker 3: page about your journey. And I always recommend to my
Speaker 3: clients to start that journey six months before you're purchasing.
Speaker 3: And I say that because that puts you in the
Speaker 3: prime position to get your budgeting and cash flow sorted out.
Speaker 3: Have a few tricky conversations, maybe improve a credit score,
Speaker 3: get rid of I now pay laters that you might
Speaker 3: want to get rid of. It enables you to pay
Speaker 3: down some credit cards if you've got them, and get
Speaker 3: on the right page. It also enables you to put
Speaker 3: yourself in a position where you are paying into a
Speaker 3: savings account exactly what you think that mortgage or a
Speaker 3: payment might be, each and every single month, so you
Speaker 3: can start getting into the motions of quote paying the mortgage.
Speaker 3: Because too many times do I see people in our
Speaker 3: community biting off more than they can chew. Because if
Speaker 3: you go to a broker, they're going to go, all right, GMV,
Speaker 3: we're so excited to buy your first marital home, and
Speaker 3: this is how much you can spend up to. And
Speaker 3: too many people take that spend up to amount as
Speaker 3: gospel and they go, oh, they said, we can borrow
Speaker 3: a million dollars. Gee, we should spend a million dollars,
Speaker 3: But that might not actually be the smartest thing for
Speaker 3: your cash flow, because what that is saying is, with
Speaker 3: your current financial situation, you have that money at your
Speaker 3: disposal so you can pay that mortgage. But what it
Speaker 3: actually might mean is you're on rice and noodles and
Speaker 3: you're not able to go on any holidays. And yes,
Speaker 3: with your current financial situation, you've been sacrificing for a
Speaker 3: really long time to get that home deposit together, which
Speaker 3: means you might not have done any of those things.
Speaker 3: You might not have eaten out, and you're kind of
Speaker 3: waiting until you get to the point where you're like, great, gee,
Speaker 3: we've got this mortgage. Now we're going to pay the
Speaker 3: minimum repayments and we're going to go and we're gonna
Speaker 3: go out for dinners and we can get back to
Speaker 3: having holidays now we've got the house. But your mortgage
Speaker 3: repayments might actually be so much that you can't do that.
Speaker 3: So you need to look at how much those mortgage
Speaker 3: repayments are going to impact your lifestyle, and a good
Speaker 3: way of doing that is six months before getting a mortgage,
Speaker 3: starting to save that amount even if that is, you know,
Speaker 3: more than what you think you'll spend. I think it
Speaker 3: gives you a really good indication of what you could
Speaker 3: or couldn't do. Does that make sense. Yeah, especially as
Speaker 3: a duo to kind of exactly what another is doing.
Speaker 3: It always looks really good to a bank if you go, hey, look,
Speaker 3: we've been actually saving that amount because rent isn't taken
Speaker 3: into consideration, which is a joke. But we've been saving
Speaker 3: the amount that the mortgage is going to be for
Speaker 3: the last six months, aren't we. You're responsible humans who
Speaker 3: should be given a home loan. Stunning. Let's move on
Speaker 3: to scenario two. Yes, sir, you and I are in
Speaker 3: a relationship. Noyes just think about it, but you keep
Speaker 3: making me think about it and everybody else listening. But
Speaker 3: here's the twist. Yeah, I'm the baller. You are the baller.
Speaker 2: You're just my little girlfriend. Anyway, I'm just your little girl. Fairwell,
Speaker 2: I'm going way to make me feel menial.
Speaker 3: I'm going to be applying for a home loan all
Speaker 3: my I don't like this power dynamic doing it all
Speaker 3: by myself, and I feel repating at all. But you
Speaker 3: might pay some rent in the future. What about what
Speaker 3: about the cleaning I do, well, what about the emotional
Speaker 3: support I give you? Talk to me about that? What
Speaker 3: happens in that situation. So that's a really hard situation
Speaker 3: because if you're in a de facto relationship, your partner's
Speaker 3: spending and your partner's income is still going to be
Speaker 3: taken into consideration. And I think it is an absolute joke.
Speaker 3: Even if you are one hundred percent financially independent, saying
Speaker 3: you are in a position where you have a partner
Speaker 3: is going to mean that the banks are going to
Speaker 3: want to know what position your partner is in, because
Speaker 3: the banks are going to assume and I know that
Speaker 3: this sounds really unfair, but there's good reason to their rhyme.
Speaker 3: What if your partner lost their job. Ge, if I
Speaker 3: went out and I got fired, you would then, hopefully,
Speaker 3: as my partner, go don't worry the I've got us.
Speaker 3: So the bank needs to take that situation into consideration.
Speaker 3: Whether I've been made redundant or lose my job, or
Speaker 3: you know, get ill or injured or something happens, that
Speaker 3: is a risk that the bank is taking into consideration.
Speaker 3: So pragmatically, I completely understand it. But I have a
Speaker 3: friend going through that exact situation at the moment, and
Speaker 3: the amount that they're able to borrow is like, I
Speaker 3: think eighty thousand dollars less than what it would be
Speaker 3: if they had applied as a single person with no
Speaker 3: de factor relation. Really, yeah, it's a joke. And I
Speaker 3: say it's a joke because they obviously think it's really unfair.
Speaker 3: I think it's really unfair, and it's putting them in
Speaker 3: a position where they can't buy what they want to buy,
Speaker 3: but they can afford it, and they're completely financially independent
Speaker 3: of their partner. But because they've lived together and they
Speaker 3: had a factor and they're doing the right thing and
Speaker 3: telling the broker that there's not much you can do.
Speaker 3: Apologize if you've already answered this. But what if I'm
Speaker 3: just thinking of a mate of mine. What if you've
Speaker 3: been with someone for three years?
Speaker 2: Yeah, you've lived together for two in a house that
Speaker 2: they own, yep, then you break up suddenly, Yeah, what
Speaker 2: is my friend in title too?
Speaker 3: From a financial position, so it completely depends on the situation,
Speaker 3: how much they lent on each other financially, whether they
Speaker 3: were thinking that they were contributing to that mortgage or not,
Speaker 3: whether they were very clear from the get go, like
Speaker 3: I've got a mate who bought a property in Richmond,
Speaker 3: and she turned around and was like, all right, if
Speaker 3: you're my boyfriend and you're moving in, you're paying rent.
Speaker 3: Here's your rental agreement, and made it crystal clear that
Speaker 3: they were never contributing to them. More so in that situation,
Speaker 3: it's a little bit clearer, but as a base, if
Speaker 3: you know, the proverbial hit the fan and they ended
Speaker 3: up in family court. The family court actually starts at
Speaker 3: a fifty to fifty basis and then goes back and
Speaker 3: forth from there. Interesting. It's terrifying, right, yeah, it is.
Speaker 3: It is. It's scary, and I think that's why we
Speaker 3: should be having these open, honest conversations when we're both
Speaker 3: in our right mind. Like g we are so deeply
Speaker 3: in love with one another, which is why we should
Speaker 3: be talking today about, well, gee, what happens if you know,
Speaker 3: we break up? Because right now I am going to
Speaker 3: assume that you want the best for me and I
Speaker 3: want the best for you, So let's document that outcome,
Speaker 3: and even if we break up, I don't want to
Speaker 3: have that conversation with you when I've worked out that
Speaker 3: you've cheated on me with Jess, Like yeah, oh yeah,
Speaker 3: but let's just go back to the document that we
Speaker 3: drew up where we both wanted the best for each
Speaker 3: other and rely on that regardless of the situation that's
Speaker 3: making us really bitter at that point in time. So
Speaker 3: that could be a BFA or could be a rental agreement. Yes,
Speaker 3: and even if you don't want to go and get
Speaker 3: a BFA, which I obviously very very much endorsed, So
Speaker 3: that's a binding financial agreement, even writing it out and
Speaker 3: going all right, gee, let's just ride out our own
Speaker 3: binding financial agreement because we can't afford the lawyers, We
Speaker 3: can't afford to go and have it set up. Let's
Speaker 3: just find a template online. I do genuinely believe that
Speaker 3: that is better than nothing, Like, if you can't afford
Speaker 3: the actual document, I totally understand that it is an investment,
Speaker 3: and I hope it's an investment that doesn't pay a
Speaker 3: fitself right like, And I say that kindly because I
Speaker 3: don't want you to have to break up. I don't
Speaker 3: want you to have to lean on that, but it
Speaker 3: would be an investment in peace of mind. But if
Speaker 3: you can't afford that, that's okay. Let's just draw up
Speaker 3: what we have and in the future we can take
Speaker 3: that to a lawyer and get that drawn up when
Speaker 3: we're more financially stable. Let's move on now, V and
Speaker 3: talk about super. Oh a sexy topic is that saying
Speaker 3: my favorite of all the tax structures. Super is my favorite.
Speaker 2: Say again, it's you and I. We split up, We're
Speaker 2: in a de factor relationship and it ends. How does
Speaker 2: super come into the fold if it's something that we
Speaker 2: can't access for another fifty years.
Speaker 3: So it can be taken into consideration when the family
Speaker 3: courts come to play. So it is not safe and
Speaker 3: locked away from your partner sadly, so after separation, supranuation
Speaker 3: is treated as property. It's essentially a property under the
Speaker 3: Family Law Act. However, as we said before, that's very
Speaker 3: different in WA. So please please please, wherever you are
Speaker 3: if you're going through this, get advice. But it is
Speaker 3: different from other types of property because that asset is
Speaker 3: being held in trust. So, as I mentioned before, superranuation
Speaker 3: is my favorite tax structure. Supranuation is not an investment,
Speaker 3: but when you put your money into that tax structure,
Speaker 3: you then therefore invest that money, and that is the
Speaker 3: asset that the family court looks at and goes, all right, well,
Speaker 3: we probably should divide it. And again, the family court
Speaker 3: usually starts with a fifty to fifty basis and then
Speaker 3: like that's back and forth from there, which I think
Speaker 3: is a fair starting point, but not everybody sees it
Speaker 3: that way. So, as I said before, g the laws
Speaker 3: to splitting supranuation applies to everybody except for our friends
Speaker 3: in way who aren't actually eligible to split supranuation, which
Speaker 3: I think is a joke. Like, honestly, can you imagine
Speaker 3: in twenty twenty two a woman not being able to access,
Speaker 3: or anybody for that matter, not being able to access
Speaker 3: the superannuation of their partner that they supported all the
Speaker 3: way through their career does seem like a pretty outdated,
Speaker 3: archaic way of doing it. It just seems a bit wild.
Speaker 3: And I know that a lot of people listening to
Speaker 3: this are going to be like Va, I'm in my twenties,
Speaker 3: like my maner has not much supers so like, I
Speaker 3: don't care about it. They're not the people that I'm
Speaker 3: worried about. I'm worried about the women who are currently
Speaker 3: experiencing massive amounts of disadvantage and knowing the current statistics
Speaker 3: that say the biggest growing demographic of people experiencing homelessness
Speaker 3: is women over the age of fifty five. I genuinely
Speaker 3: believe that this discrepancy and this I guess power imbalance
Speaker 3: has a lot to say. And then the fact that
Speaker 3: these women who are going through a divorce, who are
Speaker 3: experiencing homelessness are not able to access superannuation. No, no, sir,
Speaker 3: to me, that's wild. So I get it. If you're
Speaker 3: twenty and you're like, that doesn't worry me. I broke
Speaker 3: up with him, Good riddance. I don't want his super
Speaker 3: I get that, But there are a lot of people
Speaker 3: who are significantly disadvantaged by that.
Speaker 2: Let's talk now, VI about trusts.
Speaker 3: Surely they're owned by the individual and aren't going to
Speaker 3: be oh, you know, everything is fair game. I think
Speaker 3: it's a very is outdated the right word here, I
Speaker 3: don't think it is. It's a very American view to
Speaker 3: think you can hide assets from your partner, you know
Speaker 3: how an American TV shows that like, oh my god,
Speaker 3: put it in a trust and she won't be able
Speaker 3: to access it, or like right before in American TV,
Speaker 3: right before they ask their wife for a divorce, they
Speaker 3: like hide all their shit, or the wife finds that
Speaker 3: the husband's cheating and she's like, oh my god, I'm
Speaker 3: going to go see a lawyer before he figures it out.
Speaker 3: I'm going to move this and this. That doesn't happen
Speaker 3: in Australia. In Australia it is completely transparent. You can't
Speaker 3: hide anything from the family courts, which I think is very,
Speaker 3: very important and is another reason why our system is
Speaker 3: better than America's. But as I said, massive misconception that
Speaker 3: assets that are owned in quote a discretionary trust will
Speaker 3: not form part of the property pool available for division
Speaker 3: between the spouses. As I said before, the starting point
Speaker 3: is always fifty to fifty and then they go back
Speaker 3: and forth from there. It's also super common for separated
Speaker 3: spouses or separated partners to argue about whether a trust
Speaker 3: forms part of the property pool because they think that
Speaker 3: that's a protected asset. They're like, no, that's a trust,
Speaker 3: that's mine, rah rah, because they see it as a
Speaker 3: resource that is ultimately entirely theirs, when that's just not
Speaker 3: the case. But again, this all completely depends on the
Speaker 3: nature of the spouse's interest and their degree of control
Speaker 3: over the trust and how all of that works. But no,
Speaker 3: there's always, always, always visibility in these things. Even if
Speaker 3: like let's say that you and I we were do
Speaker 3: you know what we're going to become. We're going to
Speaker 3: become property investing moguls g And what we do is
Speaker 3: we go and establish a trust because we're like genius
Speaker 3: a trust to keep all our properties. That sounds genius,
Speaker 3: But you're the director and you're the person who set
Speaker 3: it up, and somehow I just got completely missed. That
Speaker 3: doesn't mean I'm going to miss out because you had
Speaker 3: to put that asset on the table, so you can't
Speaker 3: screw me over. It is harder because obviously if it's
Speaker 3: one hundred percent in your name, there's probably a lot
Speaker 3: of hurdles that would have to go over in the
Speaker 3: legal system. But at the end of the day, thankfully
Speaker 3: we live in a world where everything is transparent. Sophy,
Speaker 3: are we out of the woods? If you and I
Speaker 3: break out? Like what if we have a BFA we sorted,
Speaker 3: what's the deal? Who knows? Maybe did you cheat on me?
Speaker 3: I don't know how savage I'm going to be about
Speaker 3: this breakup? Was it mutual? Did I ask for it.
Speaker 3: You don't know, Okay, no you did. I did. I
Speaker 3: did cheat? You did? You didn't. I wouldn't do that
Speaker 3: to you. Well you never know, though, you never know.
Speaker 3: Oh my gosh. I've just been watching a new Netflix
Speaker 3: series where a guy kind of remember what it's called,
Speaker 3: but the guy cheats on his wife and he's in politics,
Speaker 3: The Anatomy of a Scandal. Yes, I just sashed it.
Speaker 3: I started watching it in the bar. It's absolutely trash.
Speaker 3: I was very unhappy with how that ended. But that's
Speaker 3: a very interesting plug. Anatomy of a Scandal on I
Speaker 3: think it's Netflix. Check it out. It's awful Netflix. Do
Speaker 3: you know what? It's very easy to waste time. And
Speaker 3: it was kind of pervy as well, because like and
Speaker 3: Ciana Miller, isn't it who doesn't know? She's so at
Speaker 3: the end of the day, g if you do actually
Speaker 3: have a binding financial agreement that has been prepared by
Speaker 3: a lawyer, not just one that you've downloaded and put
Speaker 3: in your emails for a paper trail, which I said,
Speaker 3: I think is a very good option. If you can't
Speaker 3: afford a binding financial agreement that would be able to
Speaker 3: sort out your property and maintenance according to that agreement,
Speaker 3: the next best thing is, you know, having that paper trail,
Speaker 3: because gee, as we always say, it doesn't matter if
Speaker 3: you can afford it or not. There's always another option
Speaker 3: that you can pursue. I think it's really naive of
Speaker 3: us to go, oh, gee, we can't afford a binding
Speaker 3: financial agreement, so therefore we're just not going to do it.
Speaker 3: I think that that is really detrimental and let's just
Speaker 3: do the next best thing. But at the end of
Speaker 3: the day, I need to be brutally honest, and if
Speaker 3: everything goes south and you and I are fighting like
Speaker 3: cat and dog, and I now want the worst for
Speaker 3: you and you want the worst for me. A binding
Speaker 3: financial agreement can be challenged in Australia. Unfortunately, it is
Speaker 3: not like a prenup, which usually can't be challenged in
Speaker 3: the US, But in Australia you can challenge them. It
Speaker 3: obviously would involve court fees and actually being quite dramatic
Speaker 3: about it. But sometimes people believe it is worth it,
Speaker 3: and that is okay, each to their own. And I
Speaker 3: think that if you think that you're binding financial agreement
Speaker 3: that you set up at the start of a relationship
Speaker 3: is no longer putting everybody in the best possible position.
Speaker 3: Then yes, I do think you should challenge it, but
Speaker 3: not just to be bitter about it. But that's just
Speaker 3: my own personal take. But at the end of the day,
Speaker 3: I just think that having as many things documented as
Speaker 3: possible is the key to success. Okay, V My last question,
Speaker 3: maybe it's a dark one, so shoot me. You are
Speaker 3: really dark this week though, I am. I am.
Speaker 2: So we're in a de facto relationship. Sadly one of
Speaker 2: us passes away. What is me other partner? You're trying
Speaker 2: to kill me or well maybe you're trying. But essentially,
Speaker 2: you have the same rights as a married person nowadays,
Speaker 2: which is very cool because for a very long time,
Speaker 2: if you were just the boyfriend of you know, a
Speaker 2: partner for the last thirty years, you weren't entitled to
Speaker 2: the same rights as a married person because historically you
Speaker 2: might not have been able to marry your partner. So
Speaker 2: nowadays you are entitled to exactly the same rights, and
Speaker 2: I think that that is perfect. And this includes rights
Speaker 2: and entitlements that regard the following g I've listed them
Speaker 2: out to make them super speedy at the end. Number one,
Speaker 2: a share of an estate where no will exists, that is,
Speaker 2: and we discuss this on the episode with Lucy about
Speaker 2: wills and estate planning. So go and find that your
Speaker 2: partner dies in test state. That means they have no
Speaker 2: will and no estate plan. Number two, I've written down
Speaker 2: the right to challenge a will if you're not adequately
Speaker 2: provided for. So for example, if your partner of Rota
Speaker 2: will ages ago, didn't think about it, got in this
Speaker 2: de fact a relationship. You and your partner are five
Speaker 2: years into a relationship, you have a two and a
Speaker 2: three year old, life's pretty hectic, and their will says
Speaker 2: that one hundred percent of their assets go to their parents.
Speaker 2: You can absolutely say probably not though, because I have
Speaker 2: two small children to provide. Four or maybe you're a
Speaker 2: stay at home girlfriend or a stay at home boyfriend,
Speaker 2: or they are significantly financially responsible for you or number
Speaker 2: three receive compensation entitlements under workers' compensation law if your
Speaker 2: partner dies during the course of employment, and number four
Speaker 2: you will be able to claim their Social Security entitlements. Okay,
Speaker 2: that's a very dark place to leave it, but it's
Speaker 2: a little bit very important. If you haven't listened to
Speaker 2: our binding financial agreement episode. Go and listen to that.
Speaker 2: If you haven't listened to Our Wills, an estate planning
Speaker 2: episode with our friend Lucy Percy from Head and Heart
Speaker 2: estate Planning, who was an absolute delight, go and listen
Speaker 2: to that, because there is so much information in that
Speaker 2: that is going to put you in the best possible position,
Speaker 2: which is all I want.
Speaker 3: Perfect all right, So moral of the story, you're probably
Speaker 3: entitled to more than you think in a de facto relationship. Absolutely,
Speaker 3: it's important we use our head and not our heart
Speaker 3: though it can be hard, and yeah, it can be hard.
Speaker 3: That's very moving gee.
Speaker 2: And finally, it's really really important to keep a paper
Speaker 2: trail along the journey.
Speaker 3: Absolutely, because I don't want people to think that I'm
Speaker 3: super entitled recommending a binding financial agreement, because then you're like, great,
Speaker 3: v I want to set one up, and I'm like, okay, cool,
Speaker 3: it's going to be more than a thousand dollars and
Speaker 3: you're like, well, I don't have more than a thousand dollars,
Speaker 3: but I still want to be protected in my relationship,
Speaker 3: and the family courts are going to look really I
Speaker 3: guess fondly on that and go, okay, cool, here's all
Speaker 3: this evidence, let's sort it out. Let's actually look at
Speaker 3: this and a paper trail, regardless of what you're going through,
Speaker 3: whether that is a relationship, an argument, an employment situation
Speaker 3: like pay per trails are just in and if you
Speaker 3: don't use them, great, they're just sitting in your room
Speaker 3: box exactly. No harm done, my friend, perfection. We have
Speaker 3: a boring style. Let's do it.
Speaker 2: The advice shared on She's on the Money is general
Speaker 2: in nature and does not consider your individual circumstances. She's
Speaker 2: on the Money exists purely for educational purposes and should
Speaker 2: not be relied upon to make an investment or a
Speaker 2: financial decision.
Speaker 3: No so, and we promise.
Speaker 2: Victoria Divine is an authorized representative of Infocused Securities Australia
Speaker 2: propriet You Limited ABN four seven zero nine seven seven
Speaker 2: nine seven zero four nine AFSL two three six five two.
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Speaker 3: That's a little review. I've been on the reviews lately,
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Speaker 3: ones that makes you crack. Bye. M