Nowadays many married couples and De facto couples (including same sex couples) wish to organise their own financial affairs with respect to property division and spousal maintenance in the event of separation without resorting to contested litigation which could end up being both a very stressful and expensive progress for both of them.
When Can I Enter into a Binding Financial Agreement with my Spouse or De Facto Partner?
Married couples and De facto couples alike can now enter into Binding Financial Agreements (also known as by the popular term “Pre Nuptial Agreements” in the case of married couples and also formally known as Co-Habitation Agreements, Domestic Relationship Agreements and Termination Agreements in the case of De facto couples) at any stage of their relationship. Parties can enter into Binding Financial Agreements before marriage or co-habitation, during marriage or co-habitation or after divorce or separation.
Therefore, the parties can agree to the division of their assets privately and quickly at any stage of their relationship in the event that their relationship breaks down.
Why Should I Enter into a Binding Financial Agreement with my Spouse?
1 Binding Financial Agreements are particularly advantageous in second or subsequent marriages or relationships where people have accumulated substantial assets which they wish to protect and to ensure that children, usually from a prior marriage or relationship, inherit them.
2 To protect the assets acquired by one party prior to the commencement of the relationship and where there is a significant difference in wealth between parties.
3 It gives greater certainty and control over the parties’ financial affairs in the event of separation without having to go to Court if a dispute or disagreement arises.
4 It clarifies initial and ongoing financial contributions of the parties.
5 To protect assets which may be inherited during the relationship.
6 To avoid disputes as to the value of the assets at the commencement of the relationship or as at the date of the Financial Agreement.
7 It facilitates speedier resolution of financial matters at the end of the relationship.
Do I Have to Get the Binding Financial Agreement Approved or Registered by the Court?
Binding Financial Agreements are private agreements. That means they are like a private contract between parties which do not involve Court approval or registration by any particular external body or authority. Apart from your spouse and the parties’ respective lawyers, otherwise your Agreements remains private and confidential.
Once you and your spouse have both received independent legal advice in relation to the Agreement and both of you have executed it, the Financial Agreement becomes binding and enforceable immediately or in the manner which is stipulated in the terms of the Agreement (i.e. upon separation).
Binding Financial Agreements now give couples the opportunity to contract out of the statutory provisions in relation to the finalisation of property and spousal maintenance matters.
What Kind of Information and Documents Do I Need to Have to Enter into a Binding Financial Agreement with my Spouse?
It is important that parties provide a detailed factual history of their relationship with their spouse as well as a detailed Statement of their financial position including a list of their assets and liabilities as well as any expectation of receiving future inheritances or gifts. You will also need to provide information as to your future plans with your spouse, i.e. whether you intend to have any children during the relationship, whether one of you expect to enter into any risky business ventures or whether you intend to leave the workforce soon in order to look after the children or whether one of the parties contemplates retirement,
This information is very crucial in the following ways:-
1 It gives a clear indication of what your goals and your priorities are and such information will enable your lawyer to advise you whether these goals can be achieved by means of a Binding Financial Agreement; and
2 It will enable your lawyer to provide you with comprehensive and accurate advice as to whether, in your particular circumstances, it is advantageous or not to enter into such an Agreement.
In other words, you need to provide full and frank disclosure of all your assets, liabilities and your personal circumstances so that your lawyer may give you the best possible advice in order to protect your assets and to advise you of the effect of the Agreement on your rights.
Further, both you and your spouse (or De facto partner) will be asked to provide the value of the assets such as real estate or business. The value of assets is an important consideration as it shows the basis upon which the parties entered into the Agreement which may also prevent a potential Application to set aside the Agreement for Fraud in the future. Failure to disclose income or assets may be ground for setting the Agreement aside.
My Circumstances Have Now Significantly Changes Since I Last Entered into a Binding Financial Agreement with my Spouse – What Now?
If your personal and/or your financial circumstances have change, which could include any of the following events taking place:-
2 Birth of Children;
3 Business Failure;
4 Serious illness or disability;
6 Inheritance; and
7 Any other significant change in your personal circumstances.
You should immediately contact your lawyers and discuss the possibility of having the current Binding Financial Agreement varied to best reflect the above changes. Of course any Clause to the Binding Financial Agreement will need to be agreed to by your spouse before both of you can terminate the current Binding Financial Agreement and enter into a new Binding Financial Agreement.
Otherwise, if your spouse does not agree to a variation and it appears the current Binding Financial Agreement is too oppressive or unfair in light of the changes in your circumstances, then you need to obtain legal advice immediately to determine whether you have grounds to make an Application to the Court to have the current Binding Financial Agreement set aside. The Court has the power to set aside the Binding Financial Agreement in very limited circumstances; you need to discuss your particular circumstances with your solicitor to see if they meet the criteria for setting aside the Agreement.
If you wish to consider your options for asset protection in the event of a relationship breakdown and to draw up a Binding Financial Agreement that best meets your needs or in alternate you already have an Agreement which you would like to have reviewed because you are thinking of challenging, please contact Rockliffs on (02) 9299 4912 or email us at Lawyers@rockliffs.com.au.