Binding Financial Agreements.
Most people do not get married with a view to divorce - but most Australians do not consider the advantages of legally binding prenuptial agreements.
Australian couples can organise their future responsibilities & rights by utilising a binding financial Agreement. A financial Agreement is a contract entered into between both parties either before or after the actual Wedding date. This Agreement concerns itself with many of the factors and recommendations outlined in the Family Law Act [1975.] Australian Law also recognises Cohabitation agreements or de facto Agreements: these Agreements confirms the parties' financial and non-financial rights when the de facto relationship is terminated.
The situation today is that Australian Family Law now enables both de-facto couples and married couples to enter into Binding Financial Agreements commonly known as Prenuptial Agreements. Such Agreements provide security, certainty and are specific about the the division & distribution of assets if the relationship has to end.
Prenuptial Agreement Requirements
Binding Financial & Prenuptial agreements have strict legal requirements that must be conformed with. APrenuptial Agreement can be entered into at any stage: before, during and even after the relationship ends. They also require the Agreement of both parties.
Many Australians would see the sense in allocating time to assess a business opportunity and would research and do due diligence before investing in one. However, not many Australians consider the potential risks of a relationship breakdown at the time we begin it. It's always a good idea to consider the financial & other consequences of relationship breakdowns, and to take steps to protect yourself against these risks. Transparent and open communication with your partner is the key here: at the end of the day, the ultimate goal is to establish a climate of security, certainty and stability.
Definition: Binding Financial Agreements (or pre-nuptial agreement)
A BFA or pre-nuptial agreement is a legally binding agreement made between two parties mapping out the division of property in the event of marriage termination, and other financial considerations which might be relevant either during the marriage, or in a period of separation.
Do I need a pre-nuptial agreement / BFA?
Such a decision is a very personal one. One scenario where it may be considered include one party bringing significantly more assets into the marriage at inception than the other party. Another scenario could be a mutual decision by both parties to avoid court hearings in the future, should a divorce occur.
Is it possible to get a pre-nuptial agreement / BFA when I am already legally married?
The answer is Yes. There are particular sections of the Family Law Act  that have provisions for people who are currently married [but not yet divorced] to enter into legally binding financial Agreements in relation to their assets. A person can also get an Agreement after divorce as a method of dividing up assets without resorting to court proceedings.
Therefore, the benefits for couples entering into such Agreements involve:
- To prevent expensive and time consuming litigation if the relationship does break down.
- To clearly identify ownership of assets brought into a marriage/relationship;
- To clearly identify ownership of particular or special assets acquired during a relationship (for example, an inheritance of some kind);
- To clearly identify and protect ownership [and retention] of business interests.
When is an Agreement needed?
Those who would potentially benefit most from such an Agreement are:
- Those beginning a second marriage, to negate the cost and stresses associated with the potential breakdown of their second marriage & to provide for pre-existing and or/new children.
- Those with major/substantial assets who are already in a relationship or are considering entering a relationship and who need to protect their interests and require certainty.
- Couples employing asset protection strategies. For example, where couples decide to place all personal assets in the name of the wife, the Agreement can be prepared acknowledging the husband's financial interest regardless of whose name the property is actually in.
For more information call Coopers Lawyers on (03) 9946 3800 and find out how we can help withBinding Financial Agreements and Prenuptial Agreements