Are you considering entering into a new relationship and have some concerns about your finances?
Written on the 13th of July 2010 by Rebecca Flick
If so, a Binding Financial Agreement can be the solution you are looking for...
Many of us are concerned about the challenges of intermingling our finances with new relationships. Taking the risk of losing what we have worked so hard to achieve plays heavily on many peoples’ minds.
What if this new relationship breaks down? Am I going to lose it all and have to start again? Will I have the energy and appropriate state of mind to fight for my own assets? Will the Courts need to get involved to order a property division? Is my children’s inheritance protected?
Consider this scenario:
David is concerned that on entering into his new relationship he may put his assets at risk if the relationship does not work out the way he hopes. He is very concerned that his daughter's inheritance may be diminished or lost as a result of his relationship with Rachael.
The answer is yes. All of these concerns can be addressed prior to entering into a new relationship, during a current relationship, or after separation.
What is a Binding Financial Agreement?
A Binding Financial Agreement (BFA) is a document that can be entered into with a partner prior to a relationship, during the relationship or after separation.
BFAs have been commonly termed; prenup, prenuptial agreements, post nup, cohabitation agreements, divorce agreements, defacto agreements, separation agreements, financial agreements and the like. Of course, Financial Agreement is the term used in the Family Law Act.
Who can be helped by a BFA?
BFAs can apply to people:
a) contemplating entering into a relationship (marriage or defacto including same sex defacto relationships);
What is the purpose of a BFA?
A BFA is an agreement which makes financial arrangements for people in the event of their relationship breaking down. A BFA deals with the difficult issue of dividing property and financial resources. They can also deal with the need for the ongoing financial support of a person to the relationship after it has ended. In some instances it is appropriate for the working spouse to provide a weekly payment to the other spouse following the breakdown of the relationship because of inability of that person to self support, this could be due to such things as the care of a child and lack of skill to obtain gainful employment.
What can a BFA deal with?
In entering into a BFA you can successfully make your own rules about the financial aspects of your relationship and deal with such issues as:
• the division of property, including businesses and trusts;
You can even reach agreement about how the finances are intermingled. You can agree on how each person in the relationship can deal with their own money and joint money.
• Specify rules for the buying and owning property;
You can also avoid costly litigation following a relationship breakdown.
There are many advantages a BFA can provide you with.
One of the main advantages of a BFA is that it allows you and your partner to stipulate in writing what you believe is an equitable division of your assets and resources when your relationship is harmonious.
It makes sense to enter into negotiations with your partner when you are planning to live a harmonious life together because it can lead to an agreement that both parties find fair and reasonable. It can eliminate any niggling doubts, reduce stress and strengthen your relationship.
A BFA is the only way in the Family Law by which an agreement can be entered into in order to contract out of certain rights and entitlements that are provided for under the Family Law Act.
A BFA can only be entered into when the parties to the agreement consent to it and obtain independent legal advice.
If you have any questions, please call on 02 4904 8000 or email.
Author: Rebecca Flick
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