Because Sometimes, Plan A Doesn't Work Out

Rose Lawyers on 23 February 2015

While making financial arrangements that prepare for the event of a break-up may seem cynical, it could save you a lot of heart- and wallet-ache should relationship breakdown occur.

Most people don’t enter a relationship anticipating its end. However, as we all know, the end does come for many of them. Planning for the unexpected, then, is practical rather than cynical.

If you are about to begin a marriage or a de facto partnership and either of you have significant assets, then a Binding Financial Agreement might be worth considering. Consider it a small investment towards your potential future happiness.

What Does a Binding Financial Agreement Cover?

If you’ve watched much trashy American TV, then the phrase ‘pre-nup’ (or ‘pre-nuptials') will already be firmly lodged in your vocabulary. Put simply, a ‘Binding Financial Agreement’ is the closest thing we have to ‘pre-nups’ in Australia.

A Binding Financial Agreement is a legal document that sets out how the assets of both parties in a relationship are to be divided should the relationship break down.

It requires full, open and honest disclosure from each party of their assets and liabilities. If either party is dishonest, the Agreement may not be upheld. Additionally, both parties must agree to the planned division of assets. If there is no consensus, there cannot be a Binding Financial Agreement.

Binding Financial Agreements only cover assets and liabilities; they do not cover children. Custody of children within the relationship must be dealt with separately. 

When Should a Binding Financial Agreement Be Made?

Binding Financial Agreements can be made in the following circumstances:

  • Before entering into a de facto relationship;
  • During a de facto relationship;
  • When a de facto relationship breaks down;
  • Before a marriage;
  • During a marriage;
  • When a marriage breaks down.

moving home

If you are about to enter into a de facto relationship or a marriage and either party has significant assets, then you should consider a Binding Financial Agreement. Generally, this Agreement will ensure that should the relationship break down, each party will leave with the assets they brought to the relationship.

What Happens in the Event of a Relationship Breakdown?

If your de facto relationship or marriage does break down, there will usually need to be a Property Settlement. This can be legally done in three ways:

  • By way of a Binding Financial Agreement;
  • By way of Court Consent Orders;
  • By judicial determination (i.e. going to court and letting the judge decide).

The benefit of using a Binding Financial Agreement to settle your assets is that you get to avoid the stress and costs of Courts. At the end of the day, we can all agree that it’s better to be able to settle your own finances rather than allowing the Courts to do it for you.

Do I Need a Lawyer?

If you are considering entering into a Binding Financial Agreement, you will need to arrange legal representation.

'While this kind of forward-planning may seem cynical while you are still in a happy relationship, it is a practical way to ensure your future financial security should the unexpected occur.'

In order for a Binding Financial Agreement to be binding, both parties must be legally represented and their Lawyers must both sign the Agreement. Both parties are also required to sign the Agreement as an expression of their consent.

Rose Lawyers is highly experienced in providing assistance to people entering into Binding Financial Agreements. Our approach is a twofold one of understanding and honesty; we will always be upfront about what should be included in the Agreement, but never insensitive. Ultimately, we aim for a fast resolution that is as friendly as possible.

Summary

A Binding Financial Agreement is a legal document that sets out how the assets of both parties in a relationship are to be divided should the relationship break down.

Binding Financial Agreements only cover assets and liabilities; they do not cover children. In order for the Agreement to be binding, both parties must receive independent legal representation and provide full, open disclosure of their assets.

While this kind of forward-planning may seem cynical while you are still in a happy relationship, it is a practical way to ensure your future financial security should the unexpected occur.

Ultimately, it is better that you decide how your assets are to be divided rather than through the impersonal process of judicial determination.

For understanding, up-front advice regarding Binding Financial Agreements, call Rose Lawyers today on 03 9878 5222.