In areas of law like Business Law, Commercial Law, Property and Conveyancing, one of the most positive aspects is that the ball is in your court. In these areas you have the ability to choose your level of involvement in the legal process: you can choose to buy that property; you can choose to invest in that business, and so forth. It is often an empowering and positive process for clients who engage with their solicitor as a guide in this journey.
Family Law on the other hand, can and often will impact you whether you choose for it to or not. Relationships break down often despite the best intentions of both parties. Separation often happens either as a great surprise, or with great reluctance, with neither party really desiring to take this difficult path. It can feel as if you have no control over the process.
The area of Family Law where you can retain a degree of control is in relation to Binding Financial Agreements (BFAs) – or “Pre-nups” for those who watch a lot of American television.
A BFA offers you the opportunity to take control of your future. In the same way a Will defines what will happen to our estate when we die, a BFA defines what will happen to the assets and liabilities of two parties should they separate. It can give both you and your partner a tremendous sense of relief, satisfaction and security, knowing exactly what will happen in the unfortunate event that a relationship breaks down.
Unfortunately, some people may find it difficult to raise the topic of a BFA with their partner because of the sensitive and emotional issues that it deals with. I personally always commend people who enquire about a BFA for having the foresight, and sensibility, to really take control of their future. If you are one of those people, sitting on the fence about it, I implore you to raise the issue with your partner, then to give us a call.
A more detailed analysis of the types and forms of BFAs is dealt with in a previous blog on the topic. In the meantime, I address a few of the myths surrounding BFAs which will assist you and your partner when you are considering making an agreement.
The agreement is simple so it shouldn’t take long to work out.
There is no doubt that a simpler agreement, with a more basic scenario, will take less time to draft and formalise than a more complex agreement, but signing a deal set out on the back of an envelope, and written at the kitchen table, will not be enough. Each party will need to provide full disclosure of their financial position to the other, so they are both fully informed about the exact nature of the agreement. Collating the documents required to undertake this disclosure process can extend the time required to finalise your agreement.
Once we agree, that BFA will last forever.
There are various stages of a relationship at which you can enter a BFA – before a relationship, during a relationship, and after separation. This applies to both married and de facto couples. Should the status of your relationship change (for example, you have children), or should you both choose to structure your relationship differently to the manner originally intended in your BFA (for example, you buy a home in joint names when you stated in your BFA that you would keep your finances separate), then your agreement will need to be updated in order to remain enforceable.
Both my partner and I can see the same lawyer.
Not true – both you and your partner will need to obtain independent legal advice from separate lawyers. Each lawyer will advise their client about the BFA and provide a written statement confirming they have provided that advice. This is a specific requirement of the legislation, and it cannot be avoided.
We have both signed the agreement so it is binding.
Not quite. After the solicitors provide their advice they will each have to sign a certificate stating that they have provided advice on the agreement, and signed copies of the agreement and the certificates must be delivered to each party.
I can include in the BFA what will happen to the kids if we separate.
Not true. A BFA deals specifically with finance and property. As part of a separation children will need to be dealt with as a separate issue. You can, however, add “lifestyle” clauses to the BFA about your wishes for the children which, although not binding, can communicate the clear intention of both parties and, thus, reduce the risk of misunderstanding or dispute.
The BFA will provide for what happens if I die.
Again, not true. A BFA provides for what happens in the event of the breakdown of a relationship. If one party dies, the BFA is no longer effective and the Will becomes the document which determines the distribution of the deceased’s property. Our staff here at Watkins Tapsell can also help you with Wills, powers of attorney, and powers of enduring guardianship should you require it.
I hope some of the tips above have dispelled a few of the pesky rumours that are often associated with BFAs. If you wish to enquire further, please contact the Family Law Team.