January Newsletter - Binding Financial Agreements explained
15th January 2016
Welcome to my January Newsletter!
Welcome to 2016. I wish you all the best and a year full of good health, prosperity and happiness.
As we commence the year it is a time to reflect on why we are all here and consider not only the goals that we have set for this year but for our life. In considering our goals I would like to consider the findings of the Harvard University Study of Adult Development, a research project that has been undertaken over the last 75 years. Please find the link to a TED Talk given by the Director of the project Robert Waldinger in November last year. I believe that the findings should be of no surprise to anyone but it is a timely reminder of what I believe we are here for:
On another note I have been requested by many of you to give a brief outline regarding Binding Financial Agreements.
These Agreements have become increasingly more important in situations where people with differing financial situations and blending families endeavour to protect their assets. From my perspective a Binding Financial Agreement can act to alleviate much of the worry, which would otherwise become a problem in the relationship.
In my experience in dealing with many family matters over the years, financial problems have often led to breakdowns in relationships. Often children, as their parent seeks their happiness with a new partner, worry that the assets obtained will be lost. This worry can unwittingly cause tension which can be alleviated with the presence of a properly drafted agreement.
Such agreements are made under the Family Law Act 1975. These Agreements may be made before, during or after a marriage or before, during or after a de-facto relationship. It cannot deal with property obtained after separation of a de-facto relationship, or property obtained after a divorce. Agreements may be varied or terminated by agreement between the parties. For an Agreement to be valid it must meet the following conditions:
1. The Agreement must be signed;
2. The Agreement must stipulate under which section of the Act the Agreement is being made;
3. That each party has been given independent legal advice provided by a legal practitioner before signing as to the advantages and disadvantages at the time of signing the Agreement;
4. That the Agreement must deal with matters not previously covered by a earlier Binding Financial Agreement;
5. That a the party to the Agreement must provide to the other party or their legal practitioner, a statement from the legal practitioner providing the advice that such advice regarding the advantages and disadvantages had been given; and
6. The Agreement must be clear and unambiguous.
The Act provides conditions where the Court may intervene and change a Binding Financial Agreement. Such circumstances may occur in the case of fraud, where a party is trying to avoid an obligation; where one party has been subject to duress to sign an Agreement or where a significant change of circumstances, such as the birth of a child or children, would make it unjust and unfair to enforce the agreement.
As each person’s situation is different and the requirements individual, for each relationship, a Binding Financial Agreement must be drafted with care to faithfully reflect the wishes of the parties. The independent advice must be fully and openly provided otherwise it may not meet the stringent requirements to have it enforced. Should you wish to discuss these matters with me please make an appointment at a convenient time.
Have a great day and let me know if there are any other subjects that you wish me to discuss.
Wishing you a great day,
ps. Please diarise Wednesday, 2 March 2016 for my next breakfast meeting.
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