Breakups are tough but they’re even more difficult when disagreements on the division of relationship property and funds occur. A binding financial agreement can help ensure this doesn’t happen by clearly setting out who gets what in the event of a breakup.
To help you decide if you need your own agreement we’ve taken a closer look at what’s included in a binding financial agreement – and how you can prepare one.
What’s included in a binding financial agreement?
Binding financial agreements should always tick two boxes:
- They should be correctly prepared, legally enforceable and each party should have received independent legal advice before signing; and,
- They should include a detailed plan for division of assets if the relationship ends.
To ensure your binding financial agreement meets these two requirements it’s essential that you include all the right details. That should include:
- Key information about both parties (Names, addresses, etc).
- A full list of assets and liabilities that both parties acquired before and during the relationship.
- Details about all financial assets, including their value.
- A full breakdown of how assets should be dealt with during the relationship and divided in the event of a relationship breakdown.
- A certificate of advice or a statement from each party annexed to the agreement to confirm that each party has received legal advice.
It’s essential that all information in a binding financial agreement is correct, especially details of your financial assets. If it isn’t, the agreement may be terminated in a family law court.
What assets can be included?
Any financial assets that you want to protect can usually be covered by a binding financial agreement. Generally, if it can be valued, it can be included. Here are a few examples of things we commonly see in binding financial agreements:
- Real estate, including the home you live in and investment properties.
- Funds in bank accounts and cash.
- Investments, including shares, bonds, managed funds and cryptocurrency.
- Vehicles including cars, bikes and boats.
- Debts and liabilities.
- Inheritances and other windfall gains.
- Collectors items.
- Businesses (including part ownership of a business).
- Any financial support or maintenance to be provided after the relationship ends.
Importantly, financial arrangements for children can also be set out in binding financial agreements – but both parties should take extra care to ensure these are fair and practicable before signing.
Who can create a binding financial agreement?
It’s absolutely essential that your binding financial agreement is correctly prepared and includes all the necessary details. What’s more, it’s also important that you and your partner, spouse or ex both receive independent legal advice before entering into a binding financial agreement. This isn’t just a sensible idea – it’s a legal requirement under family law and your agreement may not be legally enforceable if you don’t meet this requirement.
In other words, it’s always best to get an experienced family lawyer to prepare your binding financial agreement. It’s also a good idea to have it reviewed every 2-3 years, or when your circumstances change.
Need a hand creating a binding financial agreement? Get in touch with the experts at Testart Family Lawyers to arrange a complementary first consultation.