Binding Financial Agreements can be entered at any stage of a relationship and accordingly there are several different types, which include these entered:-
- Before a marriage (pre-nup) or before parties commence living together, to determine how in the event of separation the assets are to be divided between the couple;
- During a marriage or de facto relationship, achieving the same goal as a pre-relationship document, just entered after the relationship commences or post-nuptials;
- After separation, divorce or following the breakdown of a de facto relationship, to set out the division of assets agreed upon by the parties.
Binding Financial Agreements in the infancy stages of a relationship or before one commences are an important step in the protection of future inheritances, pre-existing assets and business interests.
The majority of our clients entering these agreements pre-marriage or at the commencement of a new de facto relationship do so in order to protect their children’s inheritances from claims from their new spouse or to ensure their own inheritance or separate wealth is not the subject of a later settlement in favour of the new spouse.
Having one of these documents makes the separation process and the division of assets far more manageable and leads to significantly less expense (time and financial) in the process following separation. The parties will either themselves or through the assistance of their family lawyers and/or accountants work through the document and comply with its terms in an amicable fashion, which avoids lengthy delays of the family law Court system and the costs associated therewith.
In some circumstances parties upon separation will choose to enter a Binding Financial Agreement, usually owing to the what and how of the settlement terms, their preference being not to require the courts approval, something required with an Application for Consent Orders.
This also allows flexibility in the settlement terms between the parties and allows them to finalise their agreement without the Court’s approval, something that is not always provided for a number of reasons.
It is extremely important that Binding Financial Agreements are drafted with extreme care and diligence, as when poorly drafted, they can become subject to challenge or compliance issues.
This will only lead to further costs and problems, as the enforceability (or otherwise) of a Financial Agreement can be a Court case of its own, usually requiring a complete court proceeding and hearing solely on the question of whether the Agreement is to be upheld or set aside by the Court. The cost of this process can be considerable and often costs will follow the event – in a sense that if a party loses such a case there is a chance they will be ordered to pay the other party’s legal fees.
That process (the determination of whether an Agreement is binding) will then precede the standard property settlement determination through the Courts, ultimately resulting in years of litigation.
We undertake both the drafting of and advising on the binding financial agreement, even where one has been entered and a second opinion is sought as to its validity and any compliance issues in the event of enforcement or challenge at a later date for Gold Coast and Brisbane based as well as interstate clients.
We also offer a free initial discussion in relation to Financial Agreement matters, so feel free to call us to discuss at your convenience. In most instances we are able to provide a fixed fee for the drafting and/or advising on Binding Financial Agreement matters.