Binding Financial Agreements (Prenups) for De Facto Relationships
Are you, a friend or family member in the honeymoon phase of a relationship?
Statements and comments such as “we are in love – money does not matter”, “we have agreed, what is mine is mine and what is theirs is theirs” or “we don’t need a pre-nup; they are my forever” are typical of the honeymoon phase.
While it may be cynical, these are warning signs that someone may be deep in the honeymoon phase.
This is the best time for some to be looking into a binding financial agreement.
A binding financial agreement (also known as a ‘BFA’ or ‘pre-nup’) is an agreement that de-facto couples and married couples can enter into before, during and after their relationships.
The purpose of a BFA is for the couple to reach agreement as to what will happen to their assets, liabilities, and superannuation in the event of separation.
Assets may include real estate, motor vehicles, money in bank accounts, shares, and business interests
Liabilities may include home loans, personal loans, and credit cards
If a BFA is not in place, either party could instigate a court action following separation to seek a court determination on how the assets and liabilities should be split. This can be an expensive process and cause further distress for both parties.
Do Binding Financial Agreements stand up in court?
For a binding financial agreement to “>stand up in court, the agreement must be executed correctly, in accordance with the Family Law Act 1975 for the document to be valid.
Some things that need to be done during this process include:
- Both parties obtaining independent legal advice
- Both parties disclosing all assets and liabilities, including estimated values
- Both parties entering into the agreement under their own free will
If the BFA is not completed correctly, the agreement will not be valid and will not stand up in court.
To ensure that you have a valid BFA, please contact our partner, Chris Henderson on 03 9480 1155.
If you are unsure whether you need a BFA, you can complete our questionnaire.
At Phillips & Wilkins, Chris practices in the areas of Property Law, Conveyancing and Family Law. Chris has grown up in the Northern Suburbs and continues to be a part of the local community as being a member of the Old Paradians Amateur Football Club and the Mill Park Cricket Club. Learn more about Chris' legal experience.