A Financial Agreement is an effective tool for couples in managing their estate planning. Financial Agreements allow couples to pre-determine what they quantify as a fair distribution of their finances and assets, in the event of a relationship breakdown.
What is a Financial Agreement?
As mentioned above, a Financial Agreement is an effective tool that helps couples determine ownership of assets and/or liabilities of their marriage or de facto relationship.
Are all Financial Agreements binding?
A Financial Agreement must satisfy certain requirements to be binding;
- both parties must sign a Financial Agreement;
- each party must obtain independent legal advice before signing;
- your individual family lawyer must sign a statement confirming they gave you independent legal advice and provide a copy of this to your partner and their solicitor;
- it must be clear that the Financial Agreement has not been terminated by any of the parties and has not been set aside by the court.
To ensure your Financial Agreement is legally binding, we recommend you speak to one of our experienced family lawyers.
Why is a Financial Agreement beneficial?
Financial Agreements are generally beneficial for anyone, especially for:
- Couples who are bringing assets to a new relationship, especially where this is a subsequent marriage/de facto relationship.
- Children who are likely to receive a significant inheritance upon their parents’ passing. A Financial Agreement will help parents preserve this inheritance for their child, in the event of their child’s relationship with their spouse or de facto partner ending.
- ‘Generational wealth transfer’ – this occurs where parents are preparing to retire and hand over the family business to their child and their child’s partner. The Financial Agreement in this case is designed to protect the family business that has been in the family for many years.
A Financial Agreement is generally more cost-effective than attempting to negotiate a property settlement and possible court proceedings post-separation. A Financial Agreement will continue to operate despite the death of a party and will operate in favour of, and be binding on, the legal representative of that party.
For further information on the advantages and disadvantages of a Financial Agreement, we recommend you speak to one of our experienced family lawyers.
How does a Financial Agreement affect your estate?
A Financial Agreement predetermines the financial outcome of a relationship when it breaks down, and consequently removes the discretion of the Court to divide a couple’s assets. This means that parties can enter into a relationship secure in the knowledge that if they separate, each party will preserve and protect what they brought into the relationship.
Conclusion
A Financial Agreement can serve as a safety net and is an effective tool for estate planning. If you do not end up needing to use it, you have lost nothing, however it will give you peace of mind about you and your loved ones’ future.
There are various requirements that must be met for a Financial Agreement to be legally binding and the area of law regarding Financial Agreements can be complex, this is why we always recommend obtaining legal advice from an experienced family lawyer.
If you or someone you know wants more information or needs help or advice, please contact us on 08 9221 5775 or email enquiries@klimekwijay.com.