Benefits of a Binding Financial Agreement

Binding Financial Agreement

The perception that your relationship was ‘doomed from the beginning’ by drafting a prenuptial agreement is being reshaped. Binding financial agreements are a practicable and efficient way to support a quick and amicable division of assets if a relationship dissolves.

What is a Binding Financial Agreement?

Also known as a prenuptial agreement, a binding financial agreement deals with the separation of assets upon a relationship breakdown. Financial agreements cover both marriage and de facto relationships.

What are the Advantages of Forming a Binding Financial Agreement?

1. Certainty and Security

Binding financial agreements provide certainty of outcome if your relationship breaks down. It offers peace of mind knowing that your assets are secure if the relationship dissolves. Financial agreements may even continue to operate upon the death of one party.

2. Meets the Unique Needs of Each Party

Binding financial agreements made prior to relationship formation means that the allocation of assets are likely to be made by parties in a positive frame of mind. Asset separation is more likely to reflect the parties perception of fair and reasonable. Further, allocation can take into account the sentimental as well as monetary value of assets.
Binding Financial Agreements - Vania Holt Legal

3. Simplifies the Division of Accrued Assets

While a financial agreement cannot predict assets that are jointly accrued during the relationship, it can set out a method for dividing those assets. This provides for a more simplified process for dividing assets.

4. Binding

As the name suggests, binding financial agreements are binding on the condition that the agreement meets legislative requirements in the Family Law Act 1975 (Cth).

5. Can be Entered into at Any Stage of the Relationship

A binding financial agreement can be entered into prior to relationship formation, during the relationship or after relationship breakdown.

6. Reduced Court Involvement

A binding financial agreement overcomes the jurisdiction of Family Courts to make property settlement or spousal maintenance orders. Interference by the court is limited to instances of an agreement being affected by fraud, void, now impracticable, affected by unconscionable dealings of one party, or if a party would suffer hardship due to caring for a child from the relationship.

7. Reduced Costs

The simplified separation of assets avoids expensive litigation fees relating to property settlement and spousal maintenance orders.

8. Reduced Emotional Harm

The dissolution of relationships often involves a combination of high emotion, anxiety, fear, or anger. This can leave an amicable division of property almost impossible and invite expensive court intervention. However, distribution guidance from a financial agreement can prevent added anxiety or fear.

9. Acknowledges Blended Families

The unique intricacies of a family can be accounted for in a financial agreement. For example, couples who have children from previous relationships.
Binding Financial Agreements - Vania Holt Legal

Binding financial agreements are complex and require a high attention to detail when drafting to ensure that it is valid and binding upon relationship breakdown. Please contact us to discuss the suitability of a binding financial agreement or to begin the drafting process.

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