Marriage is a major part of Australia’s social fabric. But did you know that getting hitched should also change the way you approach asset protection?
McCrindle Research reports that there are nearly 119,000 marriages in Australia every year, and this number has been rising for over a decade now. Unfortunately, the flip side of this is that there are also 48,000 divorces each year nationally.
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Marriage is transformational for both you and your assets
With nearly half of all marriages breaking down, it is not a selfish thought to think about protecting your assets in the worst case scenario. For Australians coming out of the economic boom, asset protection is becoming more important than ever before.
From wills to assets: marriage changes everything
When you get married, a number of things change. For instance, unless a will was made in contemplation of a marriage, it will become void when a person marries.
While no one enters into a marriage expecting divorce, the old saying still rings true: “When you fail to plan, you plan to fail”. However, there are ways to protect your assets when entering into a marriage.
One of the most well-known solutions is a binding financial agreement (BFA), such as a prenuptial agreement. Under the Family Law Act 1975 (the Act), married and de facto couples are allowed to create legally binding financial agreements.
If your relationship ends, assets will be distributed according to the ratio or formula outlined in the financial agreement. It should cover:
- Division of assets and money
- Ongoing financial maintenance
For an agreement to be binding, it will need to be signed by both parties. Your family lawyers will also need to sign a separate statement that says independent legal advice was provided to each party.
If completed correctly, a financial agreement can help protect your assets.
A financial agreement is not a silver bullet
While a financial agreement is a great safety net, if it is approached incorrectly, it can lead to problems down the track. Section 90K of the Act outlines a number of circumstances where a court may set an agreement aside.
For instance, if the court believes that a party entered into the agreement with the purpose of defrauding or defeating a creditor, a court may make an order to set aside the agreement. As such, it is important to have advice from a family lawyer who is experienced in making binding financial agreements.
Financial agreements and separation
Agreements can be a double-edged sword in case of future marriage separation. If contingencies arise that shift the financial balance of the relationship to the other party, an agreement can become a self-inflicted injury. An experienced family lawyer can ensure that future events are considered and addressed during the creation of an agreement.
With the help of a family lawyer, you can create a comprehensive agreement that fulfils the requirements set out by legislation. By doing this, you can develop a safety net which should protect your assets and endure well into the future.
To discuss your individual situation with our Family Law team, contact McCarthy Durie Lawyers on 07 3370 5100 or fill out the contact form here.