- Are you planning on purchasing a property with a partner, to live in or as an investment?
- Are the contributions to the property by each party (either initial or ongoing) unequal?
- Are you satisfied that your financial interests and assets you have acquired prior to the relationship are protected?
- Are you concerned that you may become liable for your partner’s debts if your relationship breaks down?
If any of the above questions apply to you, you should consider a binding financial agreement (the Australian version of a “pre-nup”).
A binding financial agreement, is an agreement whereby the parties enter into a contract with each other as to how their assets will be divided in the event that their relationship breaks down. A valid, binding agreement means that neither party can make a claim in the Family Law Courts for property orders, and that the property of the parties, either jointly owned or solely owned by one party, is divided in accordance with the terms of the binding financial agreement. This saves money, time, and potential disputes between the parties down the track.
Binding financial agreements can be entered into by defacto partners, by partners contemplating marriage, and by married parties during a marriage, making them useful no matter what stage of the relationship you are in.
There are serious benefits in entering into a binding financial agreement either prior to or during a relationship, which include:
- Protection of certain assets a party brings into a relationship from being included in the matrimonial property pool to be divided if the relationship ends, including family property in which a party may have an interest;
- Protection of a party from the debts of the other party;
- Protection of assets for children from a previous relationship;
- Peace of mind for the parties in that the binding financial agreement may never need to be used, but if the worst happens, the parties have a tool to ensure they can divide assets and liabilities amicably and without the stress and expense of Court proceedings
Although the Family Law Act 1976 imposes strict requirements on binding financial agreements in order for them to be valid, provided these requirements are complied with, a binding financial agreement can provide asset protection and peace of mind for couples prior to or during a relationship.
An overview of the requirements imposed by the Act are:
- That the agreement be in writing;
- That both parties fully disclose all of their separate and joint assets and liabilities to each other, and these are set out in the agreement; and
- That both parties obtain independent legal advice as to the advantages and disadvantages of entering into the agreement.
To ensure a binding financial agreement is valid, it is essential that you seek legal advice from an experienced family lawyer. A binding financial agreement should always be prepared in conjunction with proper estate planning advice.
For further information contact our Family Lawyer, Robyn Seager firstname.lastname@example.org or on 08 8206 8444.
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