Binding Financial Agreements in De facto relationships
If you are in a de facto relationship and cohabitating with your partner, entering into Binding Financial Agreements is the only protection you can have ahead of time to safeguard the assets you “walked” into the relationship with.
This is particularly important if there is a large difference between your financial position and your partner’s financial position.
A Binding Financial Agreement during a de facto relationship, therefore, sets out how the property pool will be divided in the unfortunate event that the relationship breaks down.
These Agreements are expensive and complicated legal documents that effectively attempt to oust the jurisdiction of the Federal Circuit and Family Court of Australia to deal with the property settlement if separation occurs.
However, there are a number of potential issues to be wary of in the drafting of any Binding Financial Agreement to ensure that the agreement is legally binding and has a low chance of being successfully set aside by a party.
Those potential issues are summarised below:
key issues1. Failure to disclose – Failing to disclose your true financial position in a Binding Financial Agreement can lead to it being ultimately set aside by the Court. This could be failing to declare your true income, failing to include an asset, or failing to disclose a liability.
2. Duress – Duress can be a common ground to apply to overturn a Binding Financial Agreement. A duress case may be argued if a party has made a threat to the other party with regard to the Agreement (i.e. “sign this Agreement before we get married or the wedding is off”) such that a party has been coerced into signing the Agreement.
3. Improper legal advice – A requirement for a Binding Financial Agreement is that both parties have received independent legal advice from a solicitor as to the effect of the Agreement on their rights and the advantages