To avoid expensive Court proceedings to determine a party’s rights should a family relationship end, consideration of entering into a Financial Agreement should be given.
There are a variety of different Financial Agreements which can be made during a relationship. All are called Binding Financial Agreements (BFA’s). Binding Financial Agreements include:
- “Pre-nuptial agreements”
- “Post-nuptial Agreements”
- ‘Cohabitation Agreements”
- ‘Separation Agreements”
- “Divorce Agreements”
As the range of BFA’s suggests agreements can be made before, during or after a relationship ends. The Agreement covers how a couple’s assets and money will be divided, maintenance of either party (during marriage or after divorce) and other issues. Certain conditions must be met before a BFA will be legally binding. Both parties and their respective lawyers) must sign it. The lawyers must sign a separate declaration that they have provided independent legal advice to their respective clients in respect of
- How the agreement will affect their rights, and
- The advantages and disadvantages to the person at the time the advice is given.
Parties can agree to change an agreement. To do that if the other party does not agree a party must prove:-
- There was a fraud,
- The agreement is not practical to carry out ( as opposed to inconvenient),
- There is a major change in the children’s care/welfare,
- The other person has acted in an unfair way.
Some persons choose to enter an informal agreement. Such agreements are not enforceable by the Courts. An informal agreement can however be considered by the Courts if the Court is required to make a decision.
An informal agreement can only be made legally binding by making it into a consent order or making a BFA.
There are some disadvantages of Binding Financial Agreements. They may include:-
- The legal fees of writing the Binding Financial Agreement and having separate lawyers to advise each party can be expensive,
- Only the parties to the relationship can be parties to the Binding Financial Agreement,
- The details to be included in a Binding Financial agreement are extensive and can be complicated. Depending on the particular type of Binding Financial Agreement many situations and possibilities need to be considered and covered,
- There is no registration system for BFA’s ,
- A party to a relationship may see no benefit in signing a BFA.
This is a general overview only. Please contact our office for further information.