Will your son/daughter in-law take your family legacy?
Most of us are at least vaguely familiar with the concept of pre-nups, with American celebrity culture it is all too common to hear about a couple splitting up and Popstar X being crazy for not having one, or about how B-list actor Y is applying to a Court to overturn the pre-nup.
In Australia our Family Law Act allows for parties to enter into their own private agreements about asset division if a marriage or relationship ends, called Financial Agreements. Couples can enter into these Agreements before marrying or entering into a de facto relationship, during the marriage or relationship and even once it has come to an end. So pre-nups, post-nups and just plain nups perhaps?
In a nutshell, a Financial Agreement is a contract between parties which sidesteps the Family Law Act, and therefore abrogates the jurisdiction of the Family Court. It enables the parties to agree to an outcomes which may not necessarily mesh with the law as is stands in Australia, or enter into complex arrangements which may not be supported by the Family Court. The terms of such Agreements are as individual as the people entering into them and can account for many different variables.
Usually people think of Financial Agreements in terms of relationships with an uneven distribution of wealth, where one party may be older and hold substantial assets.
They are also common in circumstances where both parties have been married or in long term relationships previously and have both built up an asset base which they want to protect for the children of those previous relationships or marriages.
People in second or subsequent marriages or long term relationships who have previously experienced Family Court litigation often enter into Financial Agreements to ensure they will not ever return to the Court.
However Financial Agreement are also increasingly being used by young couples to preserve their present or potential future interests in multigenerational family businesses.
In recent years many of Western Australia’s pre-eminent family-run businesses, often established in the post-WWII boom, have undergone or are approaching generational change. A great many incredibly successful family-run companies were established with relatively basic business structures, and through hard work and the acquisition of high-growth landholdings now have very considerable value. It is only human nature to hope that this can be passed down to children and their children’s children.
The prospect of children marrying or entering into de facto relationships and exposing themselves and the family business to Family Law Act claims should the relationship come to an end is a very real one, and one that many families are taking steps to prevent.
You are welcome to contact John Butler or Patricia Schrape to discuss how we can help you preserve your families’ legacy.