They may have been made famous by celebrity relationship break-ups but that should not diminish the fact pre-nuptial agreements – or binding financial agreements as they are known in Australia – can be a wise choice for both parties to a relationship to protect themselves in the sad event the union ends.
Such agreements, which popular culture likes to refer to as ‘pre-nups’, are commonly associated with marriage and divorce but they are also becoming more important for de facto relationships. A binding financial agreement (BFA) between de facto partners can provide both parties peace of mind about their respective financial assets if the relationship comes to an end.
In recent years the status of de facto relationships – including same sex ones – under Australia’s family laws is almost identical to that of marriage. That is in recognition of society’s maturity in understanding de facto relationships are not only more common, but are just as loving and significant as the act of marriage. Part VIIIAB of the Family Law Act 1975 deals with financial agreements made by couples in a de facto relationship.
These agreements can be made before, during or even after a relationship breaks down. In this article, we’ll look at why a BFA can be important in clarifying the financial and other commitments of de facto couples if the relationship comes to an end.
What does a binding financial agreement cover?
A BFA primarily protects each party’s financial position after a relationship breakdown or separation. A financial agreement can cover:
- The maintenance of one or both people in the relationship;
- how assets and money from the relationship are divided;
- other issues.
If written co-operatively between both parties to the relationship, these agreements can be flexible enough to deal with a range of issues that arise when a couple separates.
Particularly where there are children from the relationship, the existence of an agreement can prevent adversarial court proceedings which can create further antagonism or conflict between the parents and provide security for how the children will be provided for into the future. Similarly, a BFA can deal with issues such as who will look after a pet or pets acquired during the relationship in the event of a break-up.
The agreement can also address future property that one half of the couple may expect, such as an inheritance from a parent or other relative, ensuring it does not become part of a property settlement order.
A BFA can also cover the often difficult issue of spousal maintenance after the relationship ends, allowing the parties to ‘contract out’ the right to seek support from each other. This issue arises where one party to the relationship – the party who is not working and typically in the role of ‘homemaker’ – has a need of ongoing financial support and the other party (the ‘breadwinner’, usually) has the ability to pay support. The agreement can deal with this issue provided one party was not on an income-tested pension at the time it came into effect.
The ‘binding’ part of financial agreements in de facto relationships
For financial agreements in de facto relationships to be ‘binding’, that is, legally enforceable, a number of steps must be followed in making one.
- The agreement must be signed by all parties;
- each party to the agreement must have received independent legal advice about both the advantages and disadvantages to their rights of the BFA;
- each party can provide a statement from a legal practitioner that such advice was given, either before or after the making of the agreement;
- a copy of the statement from the lawyer is also provided to the other party; and
- the agreement has not been terminated or set aside by a court.
Once signed, BFAs can only be cancelled or changed if there is evidence of fraud or dishonesty in its making; the agreement is impractical to put into effect; there is a significant change in the care and welfare of the children from the relationship, or; one party acted in an unconscionable way in the making of the BFA.
How specialist legal advice can help
As detailed above, a person in a de facto relationship who wishes to make a financial agreement with their partner to give them both certainty about what happens if they break up first needs independent legal advice.
Consulting with experienced family lawyers such as Felicio Law Firm can help you clarify the issues involved to ensure your rights and interests are reflected in any BFA entered into. Because these agreements become legally enforceable, it’s important to get the terms of the agreement right at the outset. Contact us at our central cost family lawyers today for an initial obligation-free consultation.