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Why bother with a Financial Agreement?

Why bother with a Financial Agreement?

Picture this…. you’re invited to speak on a local radio station about nuptial agreements following a recent government paper seeking to establish the key principals of such agreements for, not only the legal profession, but also the public. This is your first radio interview and so, you spend the evening ensuring you are familiar with the paper and the proposed plans. You’re introduced to the audience, and during that introduction the presenter summarises almost everything you read the night before. His first question to you…..”these agreements….you’re married….do you have one?”.

 This very thing happened to me, relatively early on in my career whilst working in England. Knowing my wife was listening and knowing that we did, indeed, have a conversation about such agreements, I tried (badly I confess) to avoid the question. The reality is we did discuss it, but for us, an agreement simply wasn’t appropriate and while I appreciate they have a place in family law in England and Wales, their place is very much yet to be decided.

In contrast, practitioners in Australia firmly know the place for nuptial agreements (or more precisely binding financial agreements). That is because, whilst in England and Wales they can be a “factor” in the event an application is made for financial relief upon divorce, in Australia, we have strict statute setting out the effect of such an agreement, what the agreement must contain and stipulating the necessity for advice to be received prior to signing the agreement.

Don’t get me wrong. I don’t believe they are for everyone – far from it. Though clearly, for certain couples, whether before, during or after a relationship, there is a genuine benefit in agreements addressing how their financial resources will be divided in the event of separation.

For instance, the couple where one parties’ parents have provided some form of early inheritance, second marriages (or de facto relationships) or, where one party has made a special form of contribution reflected in their assets at the time of the agreement or that is foreseeable in the future. In such circumstances, rather than asking why they should, the question should be why wouldn’t they have an agreement. I accept they certainly aren’t romantic but they may provide an element of stability and certainty at what could otherwise be a daunting time.

They must, and I mean must be done correctly, however, and recent cases demonstrate what happens when people fail to do so. Blogs over the following weeks will address a few of these.

For more information contact us.

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Tuesday, 26 May 2020

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