8 Benefits of a Binding Financial Agreement
TGB Family Lawyer and Partner Dina Paspaliaris outlines the key reasons why it would be beneficial to have a Binding Financial Agreement.
“I love and trust my partner? I believe we’ll be together forever. How could I ever ask her/him to sign an Agreement?”
I hear these statements and questions too often than not, when discussing with clients the potential of entering into a “pre-nuptial” style binding financial agreement.
However, the reality is, if one party has greater assets or property than the other when entering into a relationship or marriage, it is important that they enter into a correctly drafted and well thought out binding financial agreement in order to protect their wealth.
A Binding Financial Agreement is a complex document as it is going to ultimately deal with how the separation of assets occur if your relationship breaks down.
You need to treat it like a “legal and financial insurance” in your worst case scenario.
Some of the benefits of using a Binding Financial Agreement:
1. You create certainty of the outcome (should your relationship end);
2. There is no Court involvement;
3. The agreement will entail recitals which gives information as to the background of the agreement to justify its terms;
4. Sentimental assets and assets of monetary value can be quarantined from the pool with or without adjustment to the other party;
5. Whilst the upfront fee of preparing a binding financial agreement may appear costly, the cost of finalising property orders after separation far outweighs this expense;
6. An agreement can protect a party’s assets without requiring the Court’s consent;
7. Stamp duty and other tax concessions can apply to the agreement;
8. Both parties will know where they legally stand upon entering the agreement.
It is imperative that you obtain the right legal advice when entering into an agreement and ensure it has been correctly drafted under the Family Law Act.