The Family Law Amendment (De Facto Financial Matters and Other Measures) Act 2008 (Cth) (“the De Facto Act”) inserted a new division into the Family Law Act — Pt VIIIAB — which commenced on 1 March 2009 (and from 1 July 2010 South Australia) and deals with financial matters relating to de facto relationships in all states except Western Australia. In Western Australia, financial matters had been dealt with under Pt 5A of the Family Court Act 1997 (WA) for a number of years prior to the Family Law Act being amended.

Since 1 March 2009 (or 1 July 2010 or South Australia), s 90UB(1), s 90UC(1) and s 90UD(1) has provided for parties to de facto relationships or former de facto relationships to enter into agreements in relation to financial matters. In Western Australia, the relevant provisions are ss 205ZN , 205ZO and 205ZP of the Family Court Act 1997 (WA). (For the definition of a de facto relationship, see De facto law under the Family Law Act and De facto law — state based).

There are geographical requirements which must be met for parties to de facto relationships to enter into financial agreements: s 90UA Family Law Act 1975 (Cth). That is, spouse parties can make a Pt VIIIAB financial agreement only if they are ordinarily resident in a participating jurisdiction (s 90RA ) at the time of making the agreement. Note: This geographical requirement differs from that required for de facto relationship applications seeking property adjustment and/or maintenance: s 90SD or s 90SK .

Although there is a separate Part of the Family Law Act for de facto couples, the court has approached the determination of financial matters for a de facto couple in the same way as married couples in terms of property division, maintenance, superannuation splitting and other such matters. The requirements for a de facto or same-sex relationship agreement are the same as the requirements of a married or soon-to-be-married couple and are set out in s 90UJ(1)(b) and (c) .

In Western Australia, the legislation regarding de facto couples, including same sex couples, is almost identical to the provisions of the Family Law Act. The main differences relate to the treatment of superannuation and minor differences in relation to financial agreements. Note also the different definition of what constitutes a de facto relationships in the Family Law Act compared to the Family Court Act 1997 (WA). Also see Truman v Clifton for a review of the law concerning de facto relationship in WA by Justice Thackray, Chief Judge of the Family Court of Western Australia.

A financial agreement, unless set aside, continues in operation after the death of the party.

Some advantages of a financial agreement are:

• there is no need for approval by the court;

• there is no requirement that the agreement has to be fair and reasonable or even proper for it to take effect.

A valid binding agreement pursuant to ss 90UB, 90UC or 90UD, FLA or ss 205ZS , 205ZN or 205ZO , FCA for Western Australia is determinative of a party's rights on breakdown of the de facto relationship. It may be enforced in a court having jurisdiction under the relevant act in the same manner as if it were an order of that court.

Disadvantages of financial agreements are:

• the financial or other circumstances of the parties can change significantly over time. It is difficult to predict what those changes might be. A financial agreement may be inflexible in these circumstances.

• the court has shown a willingness to read agreements down: see Black v Black and Kostres v Kostres.

• the court will determine whether it is fair and reasonable: see Thorne v Kennedy .

• there is a potentiality for a legal adviser who does not cover all eventualities to be sued for professional negligence if an agreement proves unsatisfactory or is read down by a court.

A financial agreement can be in the form of a deed. This is a good idea for the following reasons:

• limitation periods after a breach are longer;

• recitals are enforceable as part of the contract; and

• promises in deeds do not require consideration to be enforceable.

For example, in New South Wales, the period of limitation for commencing an action for a breach under a deed is 12 years rather than 6 years: ss 16 and 14(1), Limitation Act 1969 (NSW)) and s 18 Limitation Act 2005 (WA).

A financial agreement cannot be varied. If amendments are sought to an agreement already existing, a fresh agreement must be made: ss 90UB(4), 90UC(4), 90UD(4) and 90UL, FLA and ss 205ZN(4) , 205ZO(4) and 205ZP(4) of the FCA.

If for any reason both parties no longer wish to be bound by the agreement and wish for it to be terminated, a termination agreement stating that the agreement is no longer in force must be entered into between the parties.

See Termination agreement.