Prenuptial & Financial Agreements
Parties to marriages and de facto relationships can make agreements about what happens in the event their relationship ends. Our family lawyers regularly assist people seeking advice prior to, or during a relationship as to their financial arrangements.
Prenuptial and Financial Agreements
Prenuptial Agreements and Financial Agreements
The term ‘prenup’ or ‘prenuptial agreement’ are the colloquial terms specific to financial agreements made prior to marriage. Prenuptial Agreements and Financial Agreements are in essence, the same type of document.
The agreement provides clarity as to what will happen to your property if the relationship breaks down. It takes into account what you and your partner each brought to the relationship, as well as whatever property you may have jointly acquired.
The goal of any Prenup or Financial Agreement is to detail an agreement that two people have agreed upon at the commencement of or during a relationship and avoid disputes at the time of a separation that could otherwise end up in Court.
Prenuptial and Financial Agreements
When Financial Agreements Are Used
Financial Agreements can be made at any stage of a relationship including:
- Before marriage
- During marriage
- Upon separation in a marriage
Financial Agreements are typically put into place:
- When embarking on a new or second relationship
- If there is a disparity in financial circumstances or initial contributions of the parties to a relationship or an expectation of an inheritance which one or both parties want to safeguard
- During a de facto relationship
- Upon the end of a de facto relationship
The agreement only becomes legally binding, a Binding Financial Agreement (BFA), after both parties have sought independent legal advice, signed the agreement and all of the preconditions for entering into such an agreement are strictly met.
Prenuptial and Financial Agreements
Asset Protection
Financial agreements are not for everyone, however they can be useful for:
Second Timers Mature couples where they have been previously married and that are entering into new relationships who have significant assets. Whilst they are not planning to have children together they may have children (including adult children) from previous relationships for whom they need to protect future inheritances.
Children of the Wealthy Individuals in relationships who are likely to be gifted or inherit significant wealth from parents.
People in Family Businesses Where people in relationships have family business interests, a financial agreement can be a way to minimise the interruption to business in the event that a relationship ever ends.
Couples with Wealth Disparities Relationships where there are significant differences between what each party is bringing into the relationship.
For Family Loans or Gifts It is increasingly common for parents to provide financial assistance to their child and their partner for a deposit on a house. For many parents they are not comfortable with the funds being considered a gift and prefer it to be treated as a loan. In the event of the child and their partner separating, often loans are perceived as gifts and gifts are perceived as loans and the Family Court can ultimately make that decision.
When negotiations are completed beforehand, there is far less to manage and do. This significantly reduces stress, legal expenses and a myriad of other issues.
Prenuptial and Financial Agreements
Considerations
Financial Agreements are increasingly complex, especially when used as a risk management tool at the beginning or during the course of a relationship.
People with complex business structures need to take particular care that they consider potential consequences under any commercial contract with third parties.
There may also be a need to seek specialised tax advice as to the revenue implications including stamp duty and tax. Other structures or documents may need to be reviewed as an overall financial planning or succession strategy.
Top level, specialist advice is required to ensure strict compliance with the legislation to minimise the potential for the agreement to be challenged in future.
Common Questions about Prenuptial and Financial Agreements
Do prenups / financial agreements stand up in Court?
One of the common challenges to a prenup / financial agreement relates to the requirement that both parties to the agreement receive independent legal advice and that the strict legal requirements required to enter into this type of agreement have been met. You and your partner should seek advice from different lawyers and make sure you have allowed enough time for the terms to be negotiated, reviewed and agreed upon. A specialist family lawyer will ensure that you understand exactly what you are signing and can make an informed decision about whether or not to enter into an agreement.
Read more about the effectiveness of prenups and financial agreements
What else can a prenuptial agreement / financial agreement offer?
An expertly drafted Financial Agreement can be drafted to allow for:
Protection mechanisms for any business interests (to minimise the risk, impact or disruption);
A split of the assets and liabilities than might not be permitted otherwise;
Confidentiality and privacy of the terms of the settlement (unlike matters in Court); and
Flexibility to accommodate a range of scenarios to ensure both people can be certain about what they will walk away from the relationship with.
A Financial Agreement helps people know what they will walk away with but it also can be a tool to protect investments such as businesses. When a Financial Agreement is comprehensive, assets or interests may be able to be quarantined from any future settlement.
Prenuptial and Financial Agreements
Resources
Prenuptial and Financial Agreements
Advice and Agreements
Given the significance of a financial agreement, it is imperative for it to be carefully drafted and that you both receive independent legal advice to ensure that you understand exactly what you are signing and that the proper procedure is followed.
Our family lawyers regularly assist people seeking advice prior to, and during a relationship as to their financial arrangements.
We determine the cost-benefit analysis to assist clients to make an informed decision about whether a Financial Agreement is right for their circumstances.
Prenuptial and Financial Agreements
Additional Information
Advice and Agreements
Binding Financial Agreement Lawyers
We are specialists and have helped thousands of people with advice, reviews and the preparation of complex Binding Financial Agreements.
