De facto relationship laws provide separating couples with a means to divide property & assets of the relationship should it breakdown. The reality of any de facto relationship is that a couple have elected not to marry. However de facto relationship laws give separating de facto couples very similar legal rights responsibilities as married couples enjoy. This has led to a rise in the number of de facto binding financial agreements being entered into by de facto couples. A de facto binding financial agreement allows a de facto couple to contract out or opt out of these de facto relationship laws by putting an agreement in place.
With this in mind it is important to anticipate some of the potential issues that go with contracting out of de facto relationship laws. De facto binding financial agreements help couples who are interested in protecting assets in a de facto relationship. You can enter into a binding financial agreement either before getting married or before, during or at the end if a de facto relationship.
What is a de facto binding financial agreement (BFA)?
A de facto binding financial agreement is a legal agreement between a couple who are starting, currently in or ending a relationship.
A de facto binding financial agreement details all asset including how they will be divided if the couple separates. The agreement must detail all assets owned by both parties at the commencement of the relationship. It also needs to include any assets purchased by the couple during the course of their relationship. The agreement can also stipulate how property will be divided upon separation, spousal maintenance to be paid in the event of a breakup and care of children of the relationship.
Do I need a de facto binding financial agreement?
This is a tough question. Most couples or one party to the relationship contemplates a de facto binding financial agreement at the start of a relationship or before marriage.
A de facto binding financial agreement is usually considered if one party has more assets of value than the other party and they use the agreement as one of their asset protection strategies.
Couples who want to avoid legal costs, potential delays and uncertainty that can arise when a property settlement must be determined by the Family Law Courts tend to enter into de facto binding financial agreements. Many people who have previously been through a de facto relationship breakdown and experienced the issues associated with a contested property settlement are eager to bypass de facto relationship laws and enter into an agreement.
What if I decide a de facto binding financial agreement isn’t for me?
If you elect not to put in place any asset protection strategies and your de facto relationship collapses, you will need to negotiate a de facto property adjustment. If this cannot be negotiated, you may need the Courts to decide the matter for you, along with spousal maintenance entitlements.
Unfortunately this legal process can cost upwards of $200K and take up to 24 months or longer if contested. The end result may leave you feeling dissatisfied with the final de facto property adjustment, especially if you are the wealthier party. People tend to enter into de facto binding financial agreements to opt out of de facto relationship laws and try to control the outcome should a de facto relationship end.
How do I make a de facto binding financial agreement legal?
You must take independent legal advice regarding your de facto binding financial agreement. You can start by downloading our template and the user guide. Identify the important points you & our partner agree on & outline the points you need to negotiate. Simply complete the information and take the template to an Accredited Family Law Specialist. You will both need independent legal advice to ensure fairness & no conflict of interest.
The first step is to discuss a de facto binding financial agreement with your partner. If your partner refuses to enter an agreement, then you cannot proceed further with the process. If this was the case you would need to clearly identify their concerns and motivations for refusing.
If your partner is open to entering a BFA, then download our template agreement & user guide. Negotiate & agree the points you want included. Your Accredited Family Law Specialist will then prepare a draft agreement for you to review with your partner. The agreement only becomes legally binding once it is signed by both of you & your legal advisers sign documents advising that you both received legal advice prior to signing the document.
Remember, the information contained on the site does not constitute legal advice. If you think you need legal advice you should contact an Accredited Family Law Specialist.
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