Financial Agreements – why consider them before marriage or entering a de facto relationship?

Financial Agreements or ‘pre-nups’ have been written about in the press and many comments made in social media.  They warn couples against entering into these agreements either before marriage or before entering into a de facto relationship.

It is important for us to recognise and address the risks associated with entering into financial Agreements. Provided the ‘pre-nup’ or Financial Agreement is drafted properly, advice given by a suitably experienced lawyer, and meets the requirements under the Family Law Act 1975, Financial Agreements can be extremely advantageous.

The main benefits of entering into a Financial Agreement include:

  •  it provides certainty in relation to property matters and spousal maintenance obligations;
  • it provides certainty regarding ownership and retention of property. This certainty is critical where families want to transfer their wealth to their children and where family businesses require protection;
  • it can protect assets which may be inherited prior to and/or during the relationship;
  • it can protect the assets of one party where there is a significant difference in the wealth of the parties;
  • it avoids future financial loss due to legal fees and other costs associated with stressful and often bitter disputes contested in the Family or Federal Circuit Court of Australia;
  • it recognises the initial contributions of each party and clarifies the ongoing financial obligations of each party;
  • it can give greater weight to contributions made before and/or during a relationship by a high income earning spouse than might be recognised under the Family Law Act 1975. Under this Act contributions made by a high income earning spouse can be offset by other factors (e.g. contributions as a homemaker or parent);
  • it recognises gifts or settlements made by one party to the other before or during the marriage and ensures that they are taken into account in the event of a separation;
  • it can protect the interests of a party who feels their interests will be better protected in a formal agreement rather than taking the risk of wide discretion available to the Court under the Family Law Act 1975;
  • it enables a speedy resolution of financial matters at the end of a relationship, as the terms of settlement have already been agreed upon in advance; and

In second marriages/relationships, it:

  • has the ability to protect prior assets;
  • has the ability to ensure that children of previous relationships inherit prior assets; and
  • can be made binding on a person’s estate.

Additionally, many of our clients who have opted for a Financial Agreement have reported that:

  • it promoted better long term communication in the relationship.  It generated early discussion and clarified each party’s priorities and financial expectations in relation to matters such as children and employment;
  • it demonstrated to the parties that they had no secrets from one other;
  • it gave the parties peace of mind that their contributions and/or inheritances would be taken into consideration as opposed to being subject to the view of the Court;
  • it removed source(s) of stress, particularly in second marriages or where there was pressure to protect family assets.  Financial Agreements set out the terms of settlement in advance of a relationship breakdown; and
  • it gave each party greater certainty and control over their future financial affairs.

Financial Agreements have strict requirements that must be met before they can form a binding agreement between the parties.

It is therefore imperative that independent legal advice is obtained by each party to the agreement, by a qualified and experienced family lawyer.

To obtain further advice from one of our experienced family lawyers, please contact the team at Damien Greer Lawyers.

GET STARTED TODAY

You have Successfully Subscribed!