Relationship Safety Net
All isn’t fair in love and……divorce.
But it can be.
Binding Financial Agreements, sometimes referred to as Prenuptial Agreements, colloquially coined ‘Prenups’, are not just a before marriage consideration. They are not just for the incredibly wealthy either. Binding Financial Agreements can protect more than just dollars in the event that a relationship dissolves.
In the modern age of cohabitation before ‘the big question’ even enters the picture, a Binding Financial Agreement is a tool that can be used to preserve both financial and intangible assets or rights of the individuals entering a relationship commitment that sees them bound or unified in the eye of the Australian law.
It’s not just about planning for the worst case scenario either. Given, people do not usually get married with the intent of getting divorced, but it is hard to ignore the rising divorce rate statistics. Think of it like car insurance. You don’t insure your car with the intent of getting into an accident, but at least in the unfortunate case it does happen, your insurance policy is there to fall back on.
If something does go south, you have an agreement in place that was made when both parties were in a much more relaxed state and presuming an impending positive relationship milestone, were not fighting with one another and therefore more likely to compromise and make arrangements that were truly suited to accommodating both parties fairly.
That said, the Family Law Act does not specifically require that an agreement be fair. Indeed, the Family Court has said that parties can make whatever bargain they wish. This applies to agreements made both before separation and after separation.
However, it is quite common for parties who have separated to challenge an agreement if it is believed by either of them to be unfair. If the Family Court agrees that it is unfair, then the court generally looks favorably upon seeing whether the agreement can be set aside. Your assets are then open to being distributed as the court sees fit.
Be careful of packaged products or cheap ‘DIY’ kits, remembering the age old advice, if it sounds too good to be true, it usually is.
The terms of any agreement must be carefully considered and each agreement drafted according to its own particular facts. For an agreement to be binding and to overcome any close scrutiny by the Court, it is not possible to cut corners. The agreement must be comprehensive and all relevant financial information must be available. There are also a number of technical requirements for an agreement to be binding.
There are a number of important matters to consider including:
- Full disclosure of assets by both parties.
- Ensuring no undue delay in having an agreement prepared – i.e.: don’t leave it too close to the wedding date or the date of commencement of cohabitation.
- The effect of changing circumstances such as the health of the parties or the birth of children.
- The effect upon a party who would be dependent upon Centrelink benefits if the parties were to separate.
- Each party must receive their own full and independent legal advice as to the terms of the agreement.
Whether you are getting married, moving in with a partner, or entering another relationship milestone, mutually agreeing to establish a Binding Financial Agreement is a great tool to open communication lines to create a legally binding safety net which, like your car insurance, you will hopefully never need.
To discuss how a Binding Financial Agreement could benefit you, contact our office today.
The contents of this publication are not legal advice to anybody who receives it and should not be treated as legal advice. You should not take any action following reading this publication without legal advice concerning its application or relevance to your own circumstances.
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