Protecting assets with a Pre-Nuptial Agreement

24/04/2019

A family law property dispute can wipe out your life savings. The same applies whether you were married or living in a de facto relationship.

However, with a binding financial agreement (commonly called a "pre-nuptial agreement"), entitlements to property on separation are worked out in advance, without the cost, emotion and uncertainty of a disputed property settlement through the Family Court. No one goes into a marriage expecting it to fail, but that statistics cannot be denied.

It is a difficult topic to raise with your partner. However, if you are marrying or entering a de facto relationship later in life, after you have already saved a nest egg, a legally binding agreement can give comfort and security, often to both parties. Even if your partner has more assets than you, it can be reassuring to know that your assets are protected.

Most agreements involve each party keeping whatever they brought into the relationship, with an agreed percentage split of assets acquired during the relationship. There is usually also a process as to how jointly owned assets are divided or sold. If there are children, the percentage would usually be increased in favour of the party who ends up with the children.
Each party gives full disclosure of their assets to the other, and each party is given independent legal advice before signing. If the process is done legally and correctly, the agreement will be binding and you will not lose your assets under orders of the Family Court.

 

Couples can enter into a binding financial agreement under the Family Law Act prior to marriage or de facto relationship.  Couples can also enter into a binding financial agreement during the marriage/de facto relationship or after the separation. 

Who would benefit from a Financial Agreement?

People most likely to benefit from a financial agreement are:

  • Couples who are entering into a second or subsequent marriage or de facto relationship;
  • People with assets acquired prior to the relationship that they wish to protect;
  • Couples who want certainty as to ownership of particular assets acquired during the relationship.
  • People who have children from a previous relationship and who want to protect their assets and provide for their children in the event of the breakdown of the marriage or relationship

 

What is the benefit of a Financial Agreement?

There are numerous benefits to entering into a financial agreement and those benefits are as follows:

  • Provides certainty and peace of mind to couples in the event that their relationship breaks down.
  • Protects ownership of particular assets acquired prior to a relationship.
  • Enables clients to protect the ownership of discrete assets acquired during the relationship such as an inheritance or damages claim.
  • Couples avoid costly and lengthy litigation over matrimonial assets in the event of a relationship break down.
  • The financial agreement is binding on a person’s estate in the event of death.

 

What matters are included in a Financial Agreement ?

Financial agreements only deal with: 

  • the ownership and/or distribution of a couples assets; and
  • spouse maintenance.

 

How is a Financial agreement Binding ?

 A financial agreement is binding when:

  • Each parties obtains independent legal advice;
  • The agreement is in writing and signed by both parties;
  • The agreement contains a statement that each party has received independent legal advice;
  • Each parties solicitor signs a certificate of independent legal advice and annexes it to the agreement.

 

Somerville Legal holds a monthly lunchtime seminar on family law issues of property, parenting and divorce.  Please click here to register for the next family law seminar.

 

For more information about a prenuptial or financial agreement contact Fiona Hoad, an accredited specialist in Family Law.

 

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