16 Oct The Various Benefits Of Binding Financial Agreements
Entering binding financial agreements is definitely a smart choice for those looking to protect their assets. When entering into a relationship or a marriage, and one partner has a higher number of assets or property value than the other, it is very important for them to enter into binding financial agreements to protect these assets and properties if the worse was to come.
Binding financial agreements will ultimately defend your assets should a separation occur. There is definitely a stigma attached to binding financial agreements, as it could seem like you don’t believe the relationship will work and you are not putting your faith into it, however it is simply acting as an insurance of sorts that if anything were to happen, your assets would be protected. Furthermore, they are structured in a way to take into account complexities involved in the relationship such as children.
Entering into one is not an act of bad faith, but simply an acknowledgement of the high divorce rate in Australia.
Here are some benefits of binding financial agreements.
They can soften the blow of the end of a relationship
The end of a relationship is always hard, and as a result, navigating through finances and property division between the two parties can be difficult as it is an emotionally charged situation. You hardly have the time to even realise the end of your relationship, let alone divide property and finances amongst each other. By having binding financial agreements in place beforehand, you will have some form of structure in place in the event of your relationship’s end.
If the proper measures aren’t taken into account, then you may possibly have to go to court to settle it if you cannot settle it out of court and come to an agreement, which can be hard to do in an emotionally charged situation between two parties in disagreement.
They are legally bound
Binding financial agreements are legally bound documents.
Another important benefit of binding financial agreements is that they require the parties involved to receive legal advice before signing the legally bound documents, as to know that family law will come into play should anything happen in the event of a separation. The solicitors will then sign a Certificate of Independent Advice, meaning that both parties agree to the pros and cons of using binding financial agreements. The terms of this agreement take effect in the event of a separation between the two parties. This will essentially reaffirm that the two parties are not willing to live together or continue the relationship, and they are unlikely to resolve the conflict despite their efforts.
They simplify property settlement
These binding financial agreements give you and your partner the assurance as to how properties are to be settled. It will not anticipate jointly purchased assets that have been purchased after the fact; it also will not foresee any liabilities that happen during the relationship. It will, however, help to take steps to a fair and achievable outcome for both parties. This is very important as reaching a fair and achievable outcome is how separations are settled, and will avoid having the parties go to court which can be a complex and expensive process.
In summary, binding financial agreements are very beneficial as they ensure your assets are protected in the event of a separation between partners.
Furthermore, they help to simplify property settlements and are legally bound documents that will help to enforce these measures and protect your assets.
They are often seen as a sign of bad faith; however they are simply there to protect you in the event of a relationship separation.