Statistics tell us that these days people are staying at home for longer; marrying for the first time older and starting families later. As a result, most couples entering into a de facto relationship or a marriage are bringing more to the table than ever before. It is for this reason that couples are increasingly opting to enter into Financial Agreements, to achieve certainty around what will happen to their assets in the event of a relationship breakdown.
You can enter into a Financial Agreement if you are:
1. Intending to marry or enter into a de facto relationship (regardless of gender) (also known as a “pre-nuptial agreement”);
2. In a marriage or a de facto relationship (to deal with the division of your property in the event that you separate); or
3. If you are separated (to formalise an agreed property settlement).
Married couples and couples intending to marry have had the option of entering into Financial Agreements since 2000 and de facto couples, since 2009. The intention of the legislation was to enable couples to have greater control and choice over their own financial affairs in the event of a marital breakdown, and to put in place safeguards to protect people entering into such agreements.
A properly drafted Financial Agreement can make provision for:
1. Preserving previously-owned property by “quarantining” what you each brought in/are bringing in to the relationship (you could then, for example, elect to then divide all jointly acquired assets in a certain way);
2. Protecting previously-owned assets for the benefit of children from previous marriages (this can be particularly helpful for couples entering into second or subsequent marriages);
3. Preserving interests in multi-generational or long-established family businesses, property or wealth; or
4. Prospectively deal with anticipated inheritances due to one party or both.
The importance of obtaining specialist advice
Financial Agreements require a number of formalities to be met in their drafting (and the law in the area is ever-changing), so it is important to obtain specialist advice from a lawyer who has expertise in the field. This will also ensure that the document you are entering into will achieve its intended purpose.
A properly drafted Financial Agreement can only be set aside in very limited circumstances and, due to the seriousness of their binding nature, both parties are required to obtain independent legal advice prior to entering into them.
Financial Agreements can also play an important role in estate planning and business succession.
If you would like further information or advice about your options please contact us.