We often have clients ask us; do I need a pre-nuptial agreement?
In Australia couples who are considering living together, as a de facto couple (whether same sex or heterosexual) or are considering marriage have the option of entering into an agreement to protect their assets in the event they separate. This agreement can protect not only assets in existence now, but also assets the parties purchase throughout the relationship.
These agreements are now called Binding Financial Agreements (BFAs). There have been a number of changes to the legislation relating to BFAs in the last couple of years and on more than one occasion a BFA has been set aside by the Court. It is therefore essential that anyone who is considering entering into a pre-nup or BFA ensures that it is drafted by a Family Law Solicitor who has experience in this area of the law. If the document is drafted incorrectly, not only may it be set aside but a disputed Court action may be taken which could result in significant costs for both parties.
The purpose of a BFA is to determine, before the relationship or the marriage begins what is to happen to the assets of the relationship should the marriage break down. The parties may agree to divide everything equally, or that each person gets out what they put in or any number of potential arrangements. BFAs can contain clauses to protect assets that are not even in contemplation as yet and therefore are a very useful tool for those fortunate enough to have some wealth.
One of the other significant benefits of a BFA is that it can aid the parties in resolving the property aspect of the breakdown of a relationship quickly and without drawn out and expensive Court battles. If a BFA has been drafted correctly it will come into force when the parties separate and all property of the relationship will be divided in the way set out in the agreement. There is no need to commence proceedings and there may not even be a need for both parties to engage a lawyer.
Binding Financial Agreements are a useful tool to protect assets, save both parties money and to prevent lengthy Court battles. We recommend them for any couple considering moving in together or getting married.