Binding Financial Agreements
Every relationship is different. Thornton Storgato Law works with clients just like you to navigate hidden technicalities to create a binding financial agreement:
- At the beginning of your relationship;
- During or at the end of your relationship;
A financial agreement entered into as a defacto couple, ceases to be binding upon parties becoming married.
A financial agreement entered into at the beginning of a relationship may not be binding only a few years later, if it does not provide for potential changes in a relationship such as children being born to the parties.
A financial agreement entered into on the cusp of a major event (a wedding) or under pressure by one party, may be unenforceable.
There are a myriad of reasons why a court might find that a poorly drafted agreement or an agreement which has not been made in consideration of reasonably foreseeable changes, will fail.
Done correctly Binding Financial Agreements are extremely important and effective but by no means should they be considered as a quick and cost efficient alternative to orders, or a simple and cheap solution for asset protection. If you want them to stand the test of time, they require attention to detail. For parties who are seeking to protect significant assets already held, when you consider the value of those assets a decade later, the investment of a properly prepared Binding Financial Agreements makes very very good sense.
What is a binding financial agreement?
A binding financial agreement is a document that recognises the division of property, assets, superannuation, spousal maintenance and estate claims between two people. An agreement is drawn in accordance with the Family Law Act 1975 (Cth), highlighting how the financial and property affairs of each partner will be managed should the relationship come to an end – by divorce, relationship breakdown or death – in an effort to avoid future court proceedings.
When do you need a financial agreement?
Couples enter into binding financial agreements for a range of reasons. One may own a portfolio of enviable properties; or shares or a lucrative business; both could just want the legal security a financial agreement brings to the table, without any significant factors to consider. One or both may want to preserve a lifetimes work for their children rather than a new partner or spouse. The reasons for seeking binding financial agreement are diverse, ranging from personally motivated to professionally prudent. At Thornton Storgato Law, we recommend our clients really consider the impact a financial agreement can have on their relationship before taking the next step.
Who needs a binding financial agreement in family law?
Although this is a great question, the answer really depends on your personal circumstances and the details of your relationship. Ensure the decision to request a binding financial agreement is the right one by discussing the following with your partner:
Do you (or your partner) have:
- Connections to a family business or investment?
- Reason to believe you’re entitled to a large gift or significant inheritance in the future?
- Savings, assets and money independent of your partner?
- A desire to establish the terms of any property division and monetary divisions now, to avoid court dates should the relationship not work out?
- Children from a previous relationship that need to be protected financially?
Why do you need a binding financial agreement in family law?
At Thornton Storgato Law, we’re motivated by protecting our clients from the unexpected, and while you don’t always know how things will change, a binding financial agreement will alleviate some of the anxiety that comes with potentially financially fraught decisions.
In our experience, binding financial agreements are discussed and signed due to a large gap in individual wealth; a pre-existing tie to a lucrative family business; involvement in a family property portfolio, or by couples on their second, or later marriages or defacto relationships.
Everything You Need to Know About Binding Financial Agreements
Nobody wants to plan for the end before a marriage even begins or a relationship grows under one roof, but pragmatism may help you avoid harder choices in two or ten years time. So you have all of the relevant information in one place, we’ve set out some salient specifics for you – the team at Thornton Storgato Law want you to make the best decision for your circumstances.
How much do binding financial agreements cost?
Any legal process has costs attached. It may be tempting to DIY your binding financial agreement, and while saving some money may feel good in the back-pocket now, there are some considerable costs lurking around the corner later (we’ll cover the dangers of DIY in a moment) that may put a stumble in your stride.
Working with a prenup lawyer will ensure your agreement is worth the paper it’s written on. Upon being challenged, the court regularly dismisses binding financial agreements, ruling terms are unfair in the context of the day. Legal insight and supervision will help maximise the chances of your document being recognised, no matter how your relationship and assets evolve. Don’t be fooled into entering into a bargain agreement. Only retain a family lawyer highly skilled and experienced enough to provide you with a agreement which will actually work.
Types of binding financial agreements
- Cohabitation Agreement – When you plan to or currently live together in a de facto relationship.
- Prenuptial Agreement – If you’re planning to marry.
- Separation Agreement – If you’re in the process of separating from your spouse.
- Post-Nuptial Agreement – If you’re already married.
Why you should avoid binding financial agreements?
Even the strongest relationship may be shaken by the suggestion of a binding financial agreement – equity and justice looks and feels different to each individual when it comes to their personal lives. Discussions about money, property and assets can quickly become emotional and difficult to manage, potentially impacting upcoming nuptials, damaging an established marriage or shaking the confidence of a de facto relationship.
The DIY approach will only further compound the potential for miscommunication issues in the moment and deliver serious legal implications in the future. An agreement based on a downloadable template, which fails to address present legislation and decisions of the court will be overturned, as very few people can account for what is truly fair in the moment, let alone apply a sense of impartial justice to their future selves.
Thornton Storgato Law will help you navigate fairness, identifying opportunities and points of consideration for both parties, so the contract is just, equitable and ultimately enforceable. We humanise an often stressful process, ensuring everybody is comfortable with the final document before signatures colour the dotted line.
While we caution anybody considering a binding financial agreement to consider its extensive implications, we believe creating a financial plan based on shared values when you’re in a harmonious relationship now will almost certainly save you time and money if later becomes an issue. Also an agreement reached now which does not stand up to the test of time, is likely only to cause considerable stress and anxiety and unnecessary legal fees later, when trying to persuade a court a poorly drafted agreement should be upheld.