Protect your assets wisely to stay secure in your perfect relationship!
Do you think that you’re in the most perfect relationship with the most perfect partner? Well you may be, but there’s no certainty that it’s a lasting one. You can however, ensure certainty of protecting your assets through Binding Financial Agreements (BFA’s, Financial Agreement, Relationship Agreement, Pre-Nuptial Agreement.) I also like to call BFAs ‘Big Financial Assets’, as it may be the most important document you own.
What is a Binding Financial Agreement?
A BFA is an agreement (or contract) between couples that can be put in place by a solicitor either prior to, during or after the following stages of a relationship:
- Marriage (‘pre-nuptial’ for agreements arranged prior to marriage)
- De facto
- Separation
- Divorce
These relationship agreements set out how a couple will divide their home, assets (potentially including superannuation) and liabilities in the event of a breakup.
There are specific requirements of BFAs to be ‘legally binding’. Briefly, both parties must be fully informed (through independent legal advice) regarding the effect of agreement on their ‘rights’ and what the pros and cons are of entering into the BFA. Both parties must sign the agreement document at their own free-will.
Advantages of a Binding Financial Agreement
- Can be viewed as a form of insurance – a practical and effective way to safeguard your assets.
- Minimise or avoid the potential emotional and financial cost of a relationship breakdown (as the title suggests, a breakup can be very expensive!!)
- Provide reassurance that your partner ‘loves you for you, and not your money’
- Peace of mind of what would happen if your relationship broke down.
- Peace of mind for parents/grandparents through protecting inheritance rights
- Tax benefits – for example, stamp duty may not be payable for the transfer or sale of a property if transfer of ownership is agreed within a BFA.
- Ensure long-term estate planning goals are maintained even after a breakup – i.e. it can be written into a BFA that children are provided for.
Disadvantages of a Binding Financial Agreement
- You will need to endure an awkward conversation that you desperately would prefer to avoid.
- May bring rise to trust issues in your relationship (especially in new relationships)
- Potentially give up your right to inherit from your partner’s estate or their family’s estate.
- Legal fees involved in drafting the relationship agreement can be costly.
IMPORTANT NOTE: Ensure decisions within your Binding Financial Agreement are reviewed and updated when your circumstances change as it may impact the effectiveness of the agreement.
If you’d like to discuss your current situation and BFA’s, please contact one of our Wealth Specialists and we can refer you to an appropriate expert. Please complete your details below and we’ll be in touch or give us a call on 03 9835 8200.
DISCLAIMER: MATERIAL NOT LEGAL ADVICE
The Content of this blog is intended only to provide a summary and general overview on matters of interest and does not constitute legal advice nor intended to be a substitute for legal advice. We attempt to ensure that the Content is current, however you should seek legal or other professional advice before acting or relying on any of the Content.
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