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All couples need to invest to protect their assets

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Given the unhappy reality that many relationships breakdown, more and more couples now enter into Binding Financial Agreements (BFAs) that will protect their assets and superannuation entitlements in the event of separation.

Married couples have been able to enter into BFAs since 27 December 2000. Recent reforms allow heterosexual and same sex de facto couples in Victoria and other states to utilise BFAs.

BFAs can be made in contemplation of a de facto relationship or marriage, during a de facto relationship or a marriage, after separation and after divorce.

Heterosexual or same sex de facto couples may have entered into Agreements under the Victorian Property Law Act, which has now been repealed. Given the recent changes to the law such Agreements should be reviewed by a legal practitioner and updated to comply with the current law.

To date, heterosexual and same sex de facto couples may not have thought about the legal affect of relationship breakdowns. De facto partners should seriously consider obtaining advice about their rights, responsibilities and entitlements under the Family Law Act as the reforms are substantial.

Surprisingly, a properly drafted BFA can oust the jurisdiction of the Family Court. To be enforceable, the parties to a BFA must each obtain independent legal advice and meet other requirements such as exchanging financial information.

Why you should enter into a BFA?

  • For the security of knowing that if your relationship breaks down, your assets and superannuation entitlements are protected
  • For protection against future spousal maintenance
  • To protect gifts and inheritances from family and friends
  • So that your business and business partners are not affected by the breakdown of your relationship
  • To avoid the time and stress of protracted negotiations and court proceedings about the division of assets
  • So that you, rather than the Family Court, controls how the assets of the relationship are distributed after separation
  • To limit legal costs that may be incurred upon separation
  • Because assets owned by a family trust are not beyond the reach of the Family Court
  • To maintain your privacy

Third parties such as parents and corporate entities can be party to the BFA.

There are limited circumstances where a BFA can be set aside by the Family Court. For example, a BFA can be set aside if the Court determines that the agreement is not fair and reasonable because it did not contemplate the birth of a child of the relationship, there was fraud or non-disclosure when the agreement was made.

A properly drawn BFA can be a powerful means of protecting assets and resources and provides couples with certainty in the unfortunate breakdown of a relationship.

Author: Emma Bastock