Divorce rates are on the rise. These days, couples are bringing more to the table than ever before. They stay at home with their parents for longer, marry later and start families later. Nowadays, people are more attuned to the idea of having a choice about how their financial affairs will be dealt with, in the event of a relationship breakdown.
A well-drafted Financial Agreement (known as a “BFA” or a “Pre-nup”) is one way you can “buy certainty” about how your property and finances will be dealt with if your relationship ends. The process encourages important discussions with your spouse or partner about a range of different matters – not just about money. Sensitive matters can be considered and openly discussed at a time when there is an incentive for both parties to reach agreement about an acceptable way forward if the relationship ends.
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).
The benefits of a Financial Agreement before separation includes that you can:
1. Preserve previously-owned property by “quarantining” what you each brought in. You could then elect to then divide all jointly acquired assets in a pre-determined way if you separate;
2. Protect specific assets for the benefit of children from previous marriages. This can be particularly helpful for couples entering into second or subsequent marriages;
3. Preserve interests in multi-generational or family businesses, property or wealth; and
4. Prospectively deal with anticipated inheritances due to one party or both.
The benefits of a Financial Agreement after separation includes that you can:
1. Formalise a property settlement with your former spouse in a timely and confidential way without needing to provide information to the Family Court; and
2. Not have to “justify” to the Court the reasons for the property settlement that you have reached.
You can also obtain stamp duty exemptions for the transfer of property from one party to another.
Why do you need specialist advice?
It is important that you obtain advice from a lawyer who has expertise in family law and Financial Agreements. Good advice and proper drafting will ensure that your Agreement achieves its intended purpose. A well-drafted Financial Agreement can only be set aside in very limited circumstances.