If you’re thinking about getting married or entering into a defacto relationship, one area of concern for you might be the protection of your assets in the event that for whatever reason, the relationship doesn’t work out the way you hoped.
Some people have accumulated assets they wish to maintain ownership of, or they’ve been in a relationship before and don’t want to run the risk of ending up fighting over assets in Court. They see Financial Agreements as providing certainty in the event that the relationship is not successful. In these types of examples, financial agreements can be a useful legal document, giving both parties confidence in where they stand.
Financial agreements, also known as ‘binding financial agreements’ or ‘BFA’s’ are agreements that couples enter into, which specify how their assets and liabilities will be divided in the event of the breakdown of the relationship. Essentially, a BFA is a legally binding agreement made between two people setting out the division of property, and potentially the resolution of other financial issues that might be relevant in the event of a relationship breakdown.
Financial Agreements entered into before marriage or before a de facto relationship commences are often termed “pre-nup’s’’, but the Family Law Act, 1975 provides that these types of agreements can also be entered into during the course of a marriage or defacto relationship, or following a breakdown in the relationship.
Financial agreements can be used whether you’re married, defecto or in a same sex relationship.
It is extremely important that your financial agreement is well drafted, complies with all the rules, and provides complete certainty in order to avoid any potential dispute or issues as to validity arising down the track.
Whether you should consider a pre-nuptial agreement or a binding financial agreement is a very personal decision. It might also be a mutual decision made by both parties to avoid potential courtroom proceedings and to give certainty to their relationship in the event of a divorce or separation. Commonly, they are used where one party brings significantly more assets into the marriage or relationship than the other, however this is certainly not always the case and in many instances, it is dividing the assets of the relationship equitably and by agreement and avoiding potential court proceedings that motivates people to consider binding financial agreements.
The biggest advantage of a binding financial agreement, whether entered into before, during, or following the conclusion of a relationship is that it provides certainty for the parties and keeps the control over the division of assets between the parties themselves without them having to go to court. A BFA is not filed with the Court but there are many legal requirements that need to be adhered to in order to ensure the validity of a binding financial agreement. At Kate Austin Family Lawyers, we can provide you with all the information you need to consider in determining if a BFA is right for you, and if it is, we can draft a legally binding document that covers all relevant scenarios and contains all relevant information, giving you peace of mind that it’s a document you can rely on.
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