4 minute read
OMB Solicitors - Asset Protection
ASSET PROTECTION AND FAMILY LAW - FINANCIAL AGREEMENTS
WITH THE INCREASE IN BLENDED FAMILIES AND SEPARATIONS IN MODERN TIMES, IT IS BECOMING INCREASINGLY COMMON WHEN ENTERING NEW RELATIONSHIPS TO BE CONCERNED WITH PROTECTING YOUR PRE-EXISTING ASSETS.
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Whilst it may seem unromantic or to be "cursing" a new relationship to consider what will happen if it ends, it is also very sensible, pragmatic and practical to do so.
This is where a Financial Agreement can be considered.
A Financial Agreement – What is it?
A Financial Agreement is essentially a contract between the parties to the relationship which deals with, in a formal manner, how your real estate, other assets, superannuation and liabilities will be divided in the event of a breakdown of a marriage or a de facto relationship.
There is a requirement for each party to have been independently advised as to the advantages and disadvantages of entering into the agreement and both solicitors must sign a certificate indicating they have provided that advice.
There is sometimes a misconception that a Financial Agreement is simply a prenuptial agreement and only for use before a marriage takes place or a relationship commences.
This is not the case. A Financial Agreement can be entered into at any stage of the relationship such as when a couple is entering into a de facto relationship, during a relationship whether married or not, or after separation.
A Financial Agreement – Why would you enter into one?
A Financial Agreement is primarily entered into to create a degree of certainty about what will happen in the future. It can provide clarity and a clear path for what will happen in the event of a separation.
Even if you are in a happy stage of your relationship, it can be worthwhile considering a Financial Agreement as part of a wider asset protection strategy including Estate Planning and Financial Planning.
This is partly because people are often more amicable and flexible during their relationship rather than when it ends, where there are a whole range of emotional drivers attached to their decision-making.
A Financial Agreement can also be used as a tool to finalise the financial arrangements of separated parties and can offer more flexibility than formalising their arrangements via a Court Order, such as a Consent Order.
A Financial Agreement – What are the advantages?
The end of a relationship can be incredibly stressful. If you do not have to add negotiating a property settlement into the mix at that point in time, it will make what is often a hard process, far less costly, stressful, and emotionally draining.
One of the other major benefits of a Financial Agreement is that there can be mechanisms put in place that sets out how property is to be acquired throughout your relationship and whether that occurs jointly or is kept separate from each other.
One of the greatest advantages is that there is a degree of flexibility for both parties. An experienced family lawyer will be able to prepare an agreement that can provide for a whole range of scenarios. The agreement can go into as much detail as required.
A Financial Agreement – Do you have only one chance at its terms?
A Financial Agreement would normally be set up as a one-time document, but there is a possibility that you can build into the agreement a plan to update it after a certain number of years. An alternate to reviewing the Financial Agreement is to build into the document, arrangements for future scenarios. For example, the Financial Agreement may include particular payments to be made, based on a certain number of years you have been together, or it could be dependent on the number of children you have.
It is important to note that Financial Agreements are not without risk. There is a chance they can be set aside by the Courts. This is why it is so important to ensure when you consider this as a possible asset protection strategy, that you seek advice from an expert in family law.
As an Accredited Specialist in Family Law, I advise my clients that they must provide the other party with full financial disclosure and encourage them to get evidence information that details the other person's assets and their financial position. We do that on both sides to ensure that there is a reduced risk of there being any issue later on, relating to insufficient disclosure of financial position and the nature of their assets.
Bringing Financial Agreements into asset protection discussions
In the event that you are entering into a new relationship, contemplating marriage or considering a separation, a conversation with a specialist family lawyer is the first step. Once armed with information, you can then decide if a Financial Agreement is something you wish to add to your asset protection strategy or a method to resolve your property settlement.
