The deterioration of a loving relationship is usually a dreaded outcome for all those involved.
In addition to the emotional toll it takes on a person, there is always the added stress of dividing up property and finances. Add on top of this a potential custodial battle for any children involved, and you have the recipe for a protracted and emotional legal battle.
In order to prevent some of this heartache, a couple is able to enter into what is called a Binding Financial Agreement.
Why should I enter into a Binding Financial Agreement?
When a couple commits to entering into a relationship, one of the main concerns that either of the parties may have is the long-term security of the finances and assets that they bring with them should the relationship fail in the future, and this is the role of a Binding Financial Agreement.
At its most basic level, a Binding Financial Agreement is a type of contract that allows the two parties involved to state their individual assets and finances, as well as their liabilities.
In the event of a breakdown in a relationship or the death of one of the parties, the agreement then allows for a smooth and ordered division of the assets of the two parties.
What kind of Binding Financial Agreement is right for me?
There are several types of Binding Financial Agreements set out under the Family Law Act 1975. They include de facto agreements, before marriage agreements (also sometimes referred to as a prenuptial agreement), during marriage agreements, and after marriage agreements.
All of these agreements can cover a huge array of a couple’s personal and financial matters, including (but not limited to):
- Their individual incomes
- Their current assets
- Which assets are considered as shared
- How many future assets will be managed
- Who obtains custody of the family pets
- Spousal maintenance
- How future children will affect the agreement
- How marriage will affect the agreement (in the case of a de facto relationship)
Even specific things such as the length of your relationship affecting certain provisions of the agreement can be used to pre-emptively shore up your financial situation in the event of a breakup. Read Separation and Divorce Faqs.
Benefits of a Binding Financial Agreement
One of the main principles of family law in Australia is that the two parties of a broken down relationship should try their utmost to resolve a matter outside of a courtroom. This, in essence, makes a Binding Financial Agreement a way for the family courts to attempt to ensure that this principle is taken care of before the breakdown of a relationship can even begin in most cases.
However, couples need to be aware of the ramifications of these agreements before they consider entering into one themselves. Most importantly, entering into a Binding Financial Agreement means that the parties are relinquishing their right to have a family court decide how the assets of a couple are divided.
Once these agreements are entered into, it is very difficult to have them annulled outside of a provision within the agreement, or by a mutual agreement to do so by both parties. As such, it is required by law that each individual party consult an independent lawyer for advice on an agreement before both lawyers then sign off on the document.
If you are considering creating a Binding Financial Agreement or have any other questions regarding divorce & separation matters, please do not hesitate to contact ABKJ Lawyers on 07 5532 3199 or send us a confidential message.