Below are a number of scenarios explaining when and how a financial agreement is used to secure and protect your property.
For added security please see our Financial Agreement Review Service which is available as an option on all of our agreements.
Kathy is a savvy business woman who has worked hard to build her own business and buy her own home. After a whirlwind romance on a cruise, she has fallen in love with Peter, a good looking bus driver with a sharp wit and a 1978 Land-Rover.
Now even though the newlyweds are very much in love and they intend living happily ever after, Kathy is worried she may have rushed into the relationship without thinking about the financial ramifications of the marriage. Both she and Peter agree that if things don’t work out and the relationship breaks down then Peter will not make any claim for the house and business assets which Kathy has worked so hard to aquire. Kathy wants nothing to do with the Land-Rover.
To finalise this arrangement they should make a BFA under section 90C of the Family Law Act. This will effectively isolate all of Kathy and Peter’s pre marital assets from their post marital assets, paving the way for a happy future together without suspicion. This type of agreement is sometimes known as a post nuptual agreement .
Leon is the son of a moderately wealthy farmer. In fact the family farm has not changed hands in over 100 years and the management and ownership has just been passed down to Leon. He and Andrea met 6 months ago and they have decided to get married. Even though both parties are devoted to one another, Leon is worried that should the marriage fail Andrea could make a claim for this valuable family asset. The couple have agreed in principle that Leon’s family farm should be kept out of any future dispute and shall remain in his ownership and control.
Leon can protect the asset by pre determining how the farm should be dealt with by entering into a Binding Financial Agreement made under section 90B of the Family Law Act. This type of agreement is commonly known as a ‘pre nuptial’ agreement. Entering into a BFA now will also remove any doubt and uncertainty which can often lead to arguments and in doing so can actually strengthen the relationship.
Paul and Brian have been living together for 18 months. They decided that since each owned a house before they moved in together (they are living in Brian’s house because it is bigger: Paul’s is now rented out), and there are a number of other assets, it would be a good idea to set out their intentions in the event they separate.
They have drawn up a same sex cohabitation agreement that indicates that each owns his own house and that neither intends that their business assets be shared if they separate. They have also listed the original ownership of the furniture in the house (including whitegoods and electrical appliances). If after they have lived together for a longer period, they feel differently about things, they can either come back and revise the agreement, or they can revoke it in which case the property issues would be decided under the Act.
Suzie, 43, and John, 55, have been having a relationship for some time and are thinking of living together.
Suzie was previously married and there are two teenage children of that relationship who live with her. When she and her former husband separated, her children were very young and the property arrangement was that the house should be transferred to her in full after she bought out her husband’s share. She has only a small amount left to pay on the mortgage. John, who has a high paying job, does not own any property and plans to move into the house with Suzie. Her concern is to ensure that the house remains hers, and that ultimately it will be available for the benefit of her children.
In this case they need a Pre Defacto Agreement under section 90UB of the Family Law Act 1975 ,
Jim and Kerry separated last month on reasonably amicable terms. They decided that they wanted to make their own separation agreement rather than go to the expense of bringing any court action. Kerry agreed that Jim should have the house and also agreed to take less than her half share because she earned a lot more than Jim and knew that she would be able to put a deposit on another house and service a mortgage on her salary.