Not Married? Your Partner Can Still Take Half Your Property. Here Is How to Protect Yourself.

I had a client last month who had built a three-property portfolio worth $2.1 million. Single name on every title. No marriage. No kids. Then his partner of three years filed for a property split under the Family Law Act.

He thought he was protected because they were not married. He was wrong. And the financial consequences were devastating.

This is one of those topics that nobody in the property industry talks about because it is uncomfortable, it is personal, and it does not sell houses. But it destroys more property wealth in Australia than bad market timing ever will.

De facto relationships and property law: the two-year trigger

In Australia, a de facto relationship is legally recognised after two years of cohabitation. You do not need to be married. You do not need a formal agreement. You do not even need to be living together full-time. If a court determines that you were in a genuine domestic relationship for two or more years, the Family Law Act applies 1.

What does that mean in practice? It means your partner can apply for a property settlement through the Federal Circuit and Family Court. The court will assess the total asset pool of both parties, contributions made by each party (financial and non-financial), and future needs. Then it will divide assets in a way it considers just and equitable.

The critical point: it does not matter whose name is on the title. It does not matter who paid the deposit. It does not matter who services the mortgage. The court looks at the relationship holistically and divides assets based on contribution and need, not ownership 2.

I have seen a client lose 40 per cent of a portfolio that was entirely in their name, funded entirely by their income, with zero financial contribution from the partner. The court recognised the partner's non-financial contributions, domestic labour, career sacrifices, and future earning capacity disadvantage, and allocated a substantial share accordingly.

If you have investment properties and you are in a relationship, this is the single most important legal risk in your portfolio.

Binding financial agreements: the only real protection

A binding financial agreement (BFA) is the Australian equivalent of a prenuptial agreement, except it can be entered into before, during, or after a relationship, and it applies to both married and de facto couples.

A BFA allows you to define in advance how assets will be divided if the relationship ends. You can ring-fence assets acquired before the relationship, specify how assets acquired during the relationship will be split, and exclude certain assets, like investment properties, from the divisible pool entirely 3.

The requirements for a valid BFA:

• Both parties must receive independent legal advice from separate lawyers
• Both parties must sign the agreement voluntarily without duress
• The agreement must be fair and reasonable at the time of execution
• Both parties must make full financial disclosure

Cost: $3,000 to $8,000 for a properly drafted BFA. Two separate lawyers, two sets of advice, one binding document.

I want to be blunt about this. Eight thousand dollars to protect a $2 million portfolio is not an expense. It is the cheapest insurance you will ever buy.

The alternative is a court-ordered property settlement that costs $50,000 to $150,000 in legal fees, takes 12 to 24 months, and results in a division that neither party controls 4.

Family trusts: structural asset protection

Beyond BFAs, many sophisticated property investors hold assets in a family trust (also called a discretionary trust). A family trust creates a legal separation between you personally and the assets held within the trust.

In a property settlement, assets held in a family trust are not automatically included in the divisible pool. The court can still consider trust assets as a financial resource, but the bar for accessing them is higher than for personally held assets 5.

The practical effect: if your three investment properties are held in a family trust and your personal name appears nowhere on the titles, a de facto partner's claim becomes significantly more difficult to prosecute. Not impossible. But meaningfully more difficult.

Our clients who reach their fourth or fifth property often transition into a family trust structure. The trigger is usually land tax: in Victoria, the land tax threshold is lower for individuals than for trusts, and holding multiple properties in a single name can generate substantial annual tax liabilities. But the asset protection benefit is an equally compelling reason 6.

I always recommend discussing trust structures with a specialist property accountant before your second or third acquisition. The earlier you establish the structure, the cleaner the asset separation becomes.

Three things every property investor in a relationship should do

First: get a binding financial agreement. If you own investment property and you are in a de facto relationship of any duration, a BFA is non-negotiable. It is a conversation that feels awkward for about thirty minutes and then protects you for decades.

Second: keep meticulous records of financial contributions. If a relationship does end without a BFA, the court assesses contributions. Bank statements showing who paid deposits, who serviced mortgages, and who funded renovations become critical evidence. Do not rely on memory. Keep records 7.

Third: consider trust structures as your portfolio grows. Beyond the second property, the combination of land tax optimisation and asset protection makes a family trust worth the setup cost of $2,000 to $4,000.

I know this is not the exciting property content that gets clicks. Nobody wants to read about binding financial agreements when they could be reading about $850-per-week rental yields and granny flat ROI.

But across our 350-plus transactions, the clients who have been most devastated by financial loss were not the ones who bought in the wrong suburb or overpaid at auction. They were the ones who built a portfolio without protecting it from relationship risk.

The best property investment strategy in the world is worthless if you lose half of it because you did not spend $5,000 on a piece of paper.

Protect the portfolio you are building. It is worth it.