Protecting your Potential Inheritance – Binding Financial Agreements
Binding Financial Agreements (BFA) can prevent a messy splitting of assets once a couple parts ways.
These documents are sometimes known as prenuptial agreements or “prenups”.
They are agreements between de facto (inclusive of same-sex unions), soon to be married or already married couples.
Before parties enter into marriage or a relationship, BFA can provide for situations where that if the couple were to go their separate ways, then if during the relationship one of them received an inheritance, that inheritance would remain the property of the party who received it.
In addition, if parties borrow money from parents to purchase a home, for example, they should enter into a loan agreement to ensure that it is a formal arrangement.
Although there is no such thing as a “water-tight BFA”, it is always better to have one than not, especially in the case of the financially stronger party.
Prenups are more commonplace than they once were.
Due to financial pressures, there are increasing numbers of parents lending monies to children to purchase properties.
These arrangements can be noted in a BFA.
In order for BFA to be binding on the two parties, there are requirements which must be satisfied including:
– The agreement, like a contract, must be in writing and be signed by all parties to the agreement.
– The type of financial agreement and relevant section of the Family Law Act 1975 (Cth) it falls under, must be specified.
– Prior to signing, the parties must be provided with independent legal advice from a qualified legal practitioner about their rights and their advantages/disadvantages under the agreement.
Essentially, in the event of a relationship breakdown, any funds that come from the family is excluded and will remain in the property of the child.
Successful applications to set aside or challenge BFA are less common in recent times.
Please contact us to discuss preparing a BFA.