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December 7 marks the two-year anniversary of the Australian government changing the definition of marriage to include same-sex couples. Marriage has a substantial impact on personal finances. So, in this article we thought we would examine some elements of marriage and the way they impact on your money.

Marriage impacts on pretty much everything. However, marriage has specific impacts on the following parts of your financial management:

• your will and estate planning;
• property ownership;
• superannuation;
• life insurances; and
• debts and debt management.

In an article like this, we don’t have time to examine each of these in full. However, if you are married you can be confident that each of these things is affected by that marriage. So, a key question to ask yourself is: am I married? The answer might not be what you think.

Broadly speaking, there are two types of marriage. One is ‘legal marriage’ and the other is ‘de facto’ marriage. We discuss each of these briefly below.

‘Legal Marriage’

When most people think of marriage, they think of a formal, ‘legal’ marriage – the kind became available for same-sex couples in 2017.

A legal marriage is one registered with the appropriate government agency. That registration must be in accordance with the requirements of the Marriage Act 1961. Many people think of this as a ‘walk down the aisle’ marriage. Section 5 of the Marriage Act is a little more sober. It defines marriage as follows:

“Marriage” means the union of 2 people to the exclusion of all others, voluntarily entered into for life.

In order to be valid, a legal marriage must usually meet the following criteria:

1. it must be consented to by both parties (you cannot become legally married without agreeing to);
2. each party must be legally able to give their consent (which means both that each person must have reached the age of consent (18) and also that they must have legal capacity to consent);
3. neither party can be married to another person at the time of the marriage; and
4. the parties to the marriage cannot be members of a ‘prohibited relationship’ (e.g. siblings).

Because a legal marriage requires consent, it is not possible to become legally married without knowing it. The same cannot be said for the other type of marriage – de facto marriage.

‘De Facto Marriage’

De facto is a Latin term that means ‘on the facts.’ So, a de facto marriage is one that exists as a matter of fact. There has not been a formal, recognised ceremony in accordance with the Marriage Act. Instead, a couple have simply been living as if they were married.

Each state or territory in Australia allows for members of a de facto marriage to register their relationship. That said, relatively few de facto marriages are registered as relationships. Generally, it has mostly been same-sex relationships who have taken this option – but as same-sex couples may now legally marry it is expected that there will be fewer registered same-sex relationships.

Because few relationships are registered, the majority of de facto relationships become a de facto marriage without any formal process. Amongst other things, this can mean that a couple enter into a de facto relationship without realising that they have done so. From a financial point of view, this is a really important point.

The law relating to de facto marriage is more complex than the law relating to legal marriage. Simply put, legal marriage proves the marriage exists and marriage is said to exist from the point at which the legal marriage commences. In contrast, de facto marriages must be proven, and different levels of ‘proof’ are required for different purposes.

But in both cases, the fact of the marriage has a huge impact on each person’s financial situation. So, if you are not sure how marriage may have impacted your finance, come to see us and we can go through all the issues.