Admittedly, there are certain things in life that you do not want to talk, but you should nevertheless prepare for them. Examples of these are preparing wills in the event of your death, or finding someone to take care of your aging parents should you no longer be able to do so.
Another thing that you should think of, uncomfortable as it might be, is how your spouse or partner would go on financially when you separate. While the chances of this happening, for you, may be infinitesimally small, having the rug pulled from under you, financially speaking, is a possibility if you don’t have a BFA in place.
This article enumerates the reasons on why creating a binding financial agreement may be a good idea even if you would not be using it. Hopefully, this would encourage you to consider getting a BFA whether you are currently married, in a de facto relationship, or is just about to get into these types of arrangement.
Divorce Facts in Australia
According to the Australian government, divorce rates have risen slightly over the years despite having had a gradual decline in the years prior. In 2017, there have been an estimated two divorces per 1,000 people. Those who have been married nine years or less are at a slightly higher risk of getting divorced.
How old or young you are may also play a part in how high your chances of getting divorced are, regardless of when you got married. Those who are between ages 25 to 29 have the highest divorce rates, followed closely by those who whose ages fall between 45 and 49.
Certain conditions would have to be met before a divorce can be granted. Divorce proceedings would take an average of about four months before being finalized and would cost upwards to 1,200 dollars. Of course, complications such as disputes about property and asset division can drive up costs.
Having a binding financial agreement, on the other hand, can help in driving down costs. This is because all issues regarding financial matters will be clearly discussed and, unless it is disputed, execution upon dissolution of the marriage. What’s great is that BFAs are applicable for domestic partnerships as well.
Why You Should Get a Binding Financial Agreement
There are several reasons as to why a binding financial agreement is a must for every couple who are deciding to live together. It can even be creating during the course of your marriage or de facto relationship. Here are some of the things that we think make binding financial agreements a wise decision.
A Binding Financial Agreements a Safety Net for Your Finances
You can think of binding financial agreements as a form of life insurance. While your assets and property are relatively safe while the relationship and strong, a binding financial agreement serves as a safety net if ever the marriage or relationship breaks down and you decide to separate.
Just like an insurance policy, you may have to spend for something that may not happen. However, if you do separate with your spouse or partner, you will still be financially okay if your BFA has adequately protected you.
That is also the reason why you should hire a good lawyer to draw up the contract for you. Just like an insurance policy, a binding financial agreement must be valid, clear, and must be on terms that both you and your spouse are agreeable with.
Binding Financial Agreements Makes Separation Less Stressful
Getting separated would often mean that any form of civil discussion has broken down. As such, any agreements that you will be attempting to do at this point can be very difficult. More often than not, hostility and the desire to one up each other will occur, making this process stressful for all concerned.
A binding financial agreement done before a marriage or even during the course of it, while the relationship is still good and both parties are still capable of more rational thought, is one of the best things that you can do, at least from an emotional standpoint.
Should you and your partner decide to separate, there would be no more need for talk that can escalate into outright and ugly fights as everything is already laid out in the binding financial agreement. All that needs to be done is to execute the terms included in the contract and you can be on your separate ways.
Binding Financial Agreements Help Set Relationship Rules
It is not only after the marriage or partnership has ended that a binding financial agreement works. A BFA can also indicate how you would be dividing your financials while you are together. This would include any assets or properties acquired during the relationship, as well as earnings and debts.
Just like how you discuss who would do the house chores, a binding financial agreement helps define the financial rules in the household. While hanging a legal document over your partner’s head over what you may think are trivial matters may seem uncouth, this is actually a good way to prevent arguments over money.
Binding Financial Agreements Help Protect Your Own Children’s Interests
Lastly, a binding financial agreement is a great way to ensure that your children from another relationship are not left out financially. If you have assets, properties, or even company shares that you would like to keep out of your soon to be ex-partner or spouse’s hands for your own children’s future, then creating a BFA is the answer.
However, take note that binding financial agreements can only involve two parties. As such, you can only allocate assets for your own children based on the property that you will keep based on the agreement. It must also be fair and amenable to the other party.
You may need to spend a little time and effort with your spouse or partner in drafting a binding financial agreement. It can also lead to an uncomfortable and stressful discussion, especially if you are just intending to marry. However, a clear BFA can definitely save you some headaches and heartaches in the future.