Say "I do" to Financial Security: 

The Role of Binding Financial Agreements

 

Ask your grandparents and they will tell you straight up, relationships just aren’t what they used to be. Divorce rates continue to rise, and second and third marriages are now ‘the norm’.

​

Whilst you can’t protect yourself from heartache, you can protect yourself financially.

​

The American named ‘pre-nup’ is similar to an Australian Binding Financial Agreement made before marriage, or for unmarried couples, before a relationship would qualify as long term or defacto.  It allows parties to a relationship to determine how their assets will be dealt with if their relationship ends, prior to it beginning.

 

In addition, Australian law also allows couples to make Binding Financial Agreements during a relationship as well as after it comes to an end.

​

Let’s say a party to a relationship receives a large inheritance during the term of their relationship. It may be that they want to ensure that the inheritance is protected for their own children if their relationship ever sours.  Or one party enters a relationship in a much better financial position than the other due to their personal efforts. These are situations were a person might consider a Binding Financial Agreement.

​

By entering into a Binding Financial Agreement, parties to the relationship are able to essentially opt-out of having the Family Court interfere and decide the financial split between them.

​

Alert to the fact that a Binding Financial Agreement could be used as a tool to manipulate relationships, the law sets out very strict requirements that must be met for an agreement to be binding and keep the Family Court at bay. Amongst those requirements, is the requirement that each party receive independent legal advice before signing the Agreement, to ensure they are aware of the advantages and disadvantages of doing so and that they are entering the Agreement freely and without coercion. 

​

The Family Court has reserved the ability to set aside a Binding Financial Agreement if circumstances are of such a nature so as to require it, including where a party’s needs may drastically change during the relationship (i.e physical disability), or where something occurs which no reasonable person could have foreseen when they entered the Agreement.

​

Whilst this can sometimes be an uncomfortable conversation, it is an important one for people to have so that their relationship can move forward with both parties agreeing from the get-go rather than ‘kicking the can’ down the road and ending up in a nasty dispute in the future.

They say communication is key to a healthy relationship, if you would like to start the conversation, contact our offices today.

​

​