Another way of thinking about Binding Financial Agreements
Achieve better outcomes for your future
While it may still be taboo or unromantic to raise the topic of a binding financial agreement (also known as a prenuptial agreement) whilst a relationship remains intact the reality is, no one enters a relationship with the intention or hope that it fails. Yet separation/divorce rates in this country are solid.
Most Australians have health insurance, not because they hope they get sick, but just in case. At Leach Legal we encourage people to look at Binding Financial Agreements (BFA) and see that there are genuine benefits to both people entering into such an agreement.
What is a binding financial agreement?
A BFA, is a private and legally binding financial agreement between two people in a relationship. The agreement can be entered into prior to them becoming a de facto or married couple, during their de facto relationship or marriage, or after their de facto relationship has ended or on divorce.
The agreement includes current financial information from both parties (debts and assets) and states what will occur if the relationship deteriorates to a point where either partner does not want it to continue (separation or divorce).
If prepared correctly, these private agreements are useful to:
- Protect pre-acquired assets, such as a house
A BFA allows you to determine how the assets acquired prior to and during your marriage or de factor relationship would be divided. When setting up the agreement, each party agrees how pre-acquired assets are treated.
- Protect a business, such as a family business or farming operation
A BFA can assist in protecting of a partner's share in a family business by restricting that interest from claims in the event of a separation or divorce.
- Protect anticipated inheritance/s
A BFA can include provisions that state that any inherited assets will remain the property of the inheriting party. The inheritance will need to be kept separate from common property.
- Protect legitimate gifts from family members
A BFA can specify who receives assets gifted by family members.
- Protect family trusts;
A BFA can identify which trust assets or debts to keep separate from common property. Parties can choose to not make any distributions to their partner in an event of a separation or divorce.
- Protect the wealth of one party where there exists significant wealth disparity
A BFA can include provisions where one or both parties keep their assets and income separate throughout their relationship.
- Reduce the stress, uncertainty and expense of litigation
A BFA can often provide peace of mind to both parties, knowing that arrangements have been made for the future.
If you would like more information on BFAs or would like to have one drafted, please book a 15 minute consultation with Leach Legal for professional legal assistance backed by better outcomes.