Protecting Assets in Marriage
Binding financial agreements allow individuals to safeguard
their assets acquired before the marriage, inheritances, or future earnings
from the possibility of being divided in the event of a separation or divorce.
This can be particularly valuable for individuals with significant wealth,
family businesses, or complex financial portfolios.
For example, if one spouse owns a successful business, a Binding
Financial Agreement can prevent the business from becoming a contentious issue
in a divorce. By specifying the division of assets in advance, both parties can
enter the marriage with a clear understanding of their financial rights and
responsibilities.
Preserving Family Wealth
Protecting family wealth is another reason why some consider a Binding Financial Agreement. If you come from a family who has provided you with substantial assets that you wish to preserve, a well-structured agreement can help shield those assets from potential claims from a partner in the event of a relationship breakdown.
These agreements can stipulate that family assets, such as inherited properties or trust funds, remain the separate property of the individual who brought them into the relationship. This ensures that family wealth remains intact and unaffected by the dissolution of the marriage or relationship. It’s important to know that a Binding Financial Agreement is only able to protect the assets in the event of separation, and not death of one partner. If one partner passes away, their assets will be distributed in accordance with Victoria’s wills and estates laws (rather than family law).
Ensuring Clarity and Certainty
One of the primary benefits of Binding Financial Agreements is that they provide a level of clarity and certainty can be difficult to achieve prior to or during a relationship/marriage in the absence of such documentation. Without a Binding Financial Agreement already in place, if and when, parties separate, disputes over assets can become protracted and contentious, leading to emotional stress and financial loss for both parties.
These agreements can outline the intentions of the parties during the relationship and specify the process for dividing assets in the event of a separation. By establishing these terms in advance, the potential for misunderstandings and disagreements is significantly reduced.
Obtaining legal advice
While Binding Financial Agreements can offer significant protection, they must be carefully crafted and executed to be legally enforceable, and the risk of it being set aside in the future minimised. Seeking advice from an experienced family lawyer is essential for both parties to ensure that the agreement complies with the Family Law Act 1975 and that the required requisite legal advice is provided. In order for a Financial Agreement to be binding, each party must receive independent legal advice prior to a Binding Financial Agreement being signed.
Additionally, it’s crucial to revisit and enter into an updated agreement whenever there is a significant life change, such as the acquisition of new significant assets or the birth of children. This ensures that the agreement continues to reflect the intentions and circumstances of both parties and potentially even lowers the risk of it being set aside in the future.
Conclusion
Entering into Binding Financial Agreements prior to or during a de-facto relationship or marriage has become a significant consideration for many people in today’s uncertain financial landscape. While no one enters into a relationship or marriage expecting to separate, these agreements serve as proactive tools to safeguard their financial interests and provide a clear roadmap for asset division and financial obligations in the event of a de-facto relationship or marriage breakdown. If you need advice about Binding Financial Agreements or protecting your assets, contact one of our expert family lawyers in Mount Waverley and Ringwood on 0421 397 316 or at jlok@oikosfamilylaw.com.au.
