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Traditionally, when two people decided to get married, everything that you owned became the property of your spouse. The term what’s yours is mine and vice versa is also quite appropriate to describe the way your finances intertwined. However, these days this is not always the case – mainly because not everyone chooses to get hitched.
Regardless, you should be aware of the rules around money matters and de facto relationships.
So what is a de facto relationship?
Simply put, a de facto relationship exists if you have lived with your partner in a domestic capacity for an extended period of time.
According to Findlaw.com.au, “a de facto relationship exists when a man and woman cohabit together voluntarily on an intimate, domestic basis.”
How can it affect your financial stability?
Even without meaning to, your finances do become tied to your significant others, particularly when you live together.
The next phase may entail you trying to decide whether you want to open a joint bank account with your partner.
This decision will come down to a personal preference.
There are of course pros and cons to either choice and it is wise to weigh up the factors before you make a final decision.
Bear in mind that opening a joint bank account with your other half has the potential to be a big financial commitment.
The most important aspect of this is making sure you trust your partner entirely and that there is not a shadow of doubt in your mind.
Remember you are giving this person access to all of your money so you need to be sure that you can trust them.
Benefits of a joint account
Opening an account with your partner can make paying off a home loan and bills easier to handle.
You may also be able to save some money on bank fees because you will be using one account instead of two.
Before you make the leap to a combined account you should agree on what you spend money on.
Everyone has different spending habits and you need to make sure that you both agree on certain terms to prevent problems further down the road.
Types of accounts
There are two options when opening a joint bank account.
Both sign
This account requires the signatures of both parties to access the funds in the account.
Either sign
For this option, either party can access the money.
Now your choice of account may depend on what you are using the account for and the level of trust that you have in your relationship.
For example, Trish ran into problems when she separated from her long-term partner and he emptied their joint bank account suddenly and would not return her phone calls.
What happens if the relationship ends?
In the event that your de facto relationship finishes, you may wish to seek advice from a financial planning adviser.
An adviser can help you to sort through your finances and this may include compiling a financial statement, which details all your monetary information together.
From this point, an adviser can help you understand all of your financial options and assist you in managing your money in the midst of a separation.
More importantly, an adviser can help you get back on your feet financially and get on with the rest of your life.
ipac is one of Australia’s largest financial advisory firms and has offices based across the country. A wholly-owned subsidiary of the AMP Group, ipac specialises in research and financial advice that helps clients lead happier, more fulfilling lives.
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