The Use of a Financial Agreement in Estate Planning
A Binding Financial Agreement is an effective tool for protecting the wealth that both parties bring to a relationship.
Financial Agreements, also sometimes called ‘pre-nuptial agreements’, are popular with people who are considering re-marrying with a new partner. However, financial agreements are also available to both married and de facto couples, before, during and after a relationship.
What is a Financial Agreement?
The agreement does not necessarily need to deal with all of your assets – it can address certain assets selectively, such as shares or inheritances, provided that they are correctly identified.
With Financial Agreements, there is no requirement that the division of assets is equal and ‘just’. However, the preparation and execution of the agreement must strictly comply with The Family Law Act 1975.
When Do I Need a Financial Agreement?
A financial agreement is binding. This means that it will prevent either party from making an application to the Family Court for the division of property. In other words, they cannot simply change their mind about the agreement if things turn sour.
There is a wide range of reasons why people choose to make these agreements.
In some cases, a financial agreement is used to avoid conflict and costly litigation in the event of a bad separation. It can also ensure that your wishes are carried out in the event of incapacity or death.
If you have children from a previous divorce, a financial agreement can help to protect their assets. In the event that your new relationship breaks down, the agreement can ensure that your children still receive the inheritance and possessions that they are entitled to.
Legal Help – Do I Need a Lawyer?
A Financial Agreement does not need to be lodged with the Court for approval and there is no requirement to attend Court when finalising a Financial Agreement.
Since you don’t need to go to court, a lawyer is not strictly required. However, the agreement must be properly set out according to the rules of the Family Law Act.
If an agreement doesn’t meet these strict requirements, it could be set aside by a court and rendered invalid.
Major life changes may also prompt a review and revision of the agreement. It’s recommended that you talk to a lawyer when and if any changes need to be made. This ensures that any additions to the agreement are also legally enforceable.
At Robert Wood and Associates, we have more than 36 years of experience with wills and probate and all other matters related to estate law.
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