When you're beginning a relationship, the last thing that you probably want to think about is what would happen if you separated. However, for a lot of people, having a plan and a Pre-Nuptial Agreement is an effective way to avoid court proceedings and minimise difficulties if the worst should happen and the relationship ends.
In Australia, Pre-Nuptial Agreement are referred to as Binding Financial Agreements. A Binding Financial Agreement might suit you if:
- You and your partner want to minimise the conflict and uncertainties that could arise upon a separation. By reaching a fair agreement now, when you communicate well with each other and have a strong relationship, you can avoid having to resolve financial matters after you separate, when your relationship might be strained.
- You and your partner want to avoid costly Court proceedings upon separation, which are very expensive both financially and emotionally.
- You and/or your partner have children of a previous relationship and you want to preserve their inheritance.
You can enter into a Binding Financial Agreement:-
- before you and your partner start living together;
- after you and your partner start living together;
- before you and your partner marry; or
- after you and your partner marry.
However, Binding Financial Agreements are very technical and complicated and there are a number of circumstances in which a Court can set them aside. If you are thinking about entering into a Binding Financial Agreement, you should therefore keep the following 3 tips in mind.
1 - Know what a Binding Financial Agreement can do
Binding Financial Agreements can provide for the following matters:
- How you and your partner will deal with your assets and finances during the relationship/marriage;
- How you and your partner will divide your assets if you separate;
- What financial support (spouse maintenance) you and your partner will provide for each other if you separate;
- What financial support should be provided for your children after they turn 18 years of age.
Things that a binding financial agreement cannot provide for include:
- Lifestyle clauses (for example clauses about remaining faithful to one another, sharing household labour, how to raise the children, or how frequently you should visit the in-laws).
- What financial support you and/or your partner will provide for your children after you separate, until your children reach 18 years of age (child support).
2 – Seek specialist legal advice
A Binding Financial Agreement will not be binding unless you and your partner receive independent legal advice and your solicitors sign Certificates of Independent Legal Advice. It is therefore essential that you and your partner seek legal advice before signing a Binding Financial Agreement.
Binding Financial Agreements are very technical and complicated and there are a number of circumstances in which a Court can set them aside. The best way in which to protect yourself from the risk of having the Agreement set aside at a later date is to approach a law firm that specialises in family law to prepare the Binding Financial Agreement. A specialist family law firm will be best equipped to navigate the technicalities and pitfalls associated with a Binding Financial Agreement.
It is also important that your partner receives legal advice from a firm that specialises in family law. If your partner does not receive proper legal advice before they sign the agreement, there is a risk that a Court could set aside the agreement at a later time. Making sure your partner receives independent legal advice from a firm that specialises in family law will minimise this risk.
3 – Leave plenty of time
If you are thinking about entering into a Binding Financial Agreement, it is important that you seek legal advice as soon as possible. Because of the technical nature of Binding Financial Agreements, your lawyer will need time to draft the agreement properly.
It is also important that you and your partner have enough time to consider the legal advice from your respective lawyers and to engage in good faith negotiations about the financial agreement. If the agreement is rushed and you and your partner do not have much time to consider the agreement and your lawyer's advice, there is a greater risk that a Court could set the agreement aside later.
Ideally, you should allow at least 3 to 6 months from the date you instruct your lawyer until the agreement is finalised and you and your partner sign up the agreement. You should not, for example, approach a lawyer about a Binding Financial Agreements one month before the wedding. If you find yourself in this situation the best thing you can do is proceed with the wedding and approach a lawyer about the preparation of a Binding Financial Agreement once you and your partner are married.
Binding Financial Agreements, whilst complex, have a lot of benefits and have helped many of our clients. If you are thinking about entering into a Binding Financial Agreement, please contact us and we can provide you with expert advice, tailored to suit your particular needs.