Issue link: https://viewer.e-digitaleditions.com/i/122153
moneytalks Prenups The pros and cons B inding Financial Agreements (BFAs), better known as prenuptial agreements (prenups), are a useful, but by no means watertight, solution to protecting your wealth and that of your children. Although most people are familiar with the concept, BFAs are traditionally less common in Australia than the US. In recent years, however, I've seen a significant rise in clients coming to see me about BFAs. In the past the people who wanted a BFA were usually older, richer men marrying younger, asset-free women. These days it's just as likely to be younger FIFO workers, male and female, who have accumulated significant savings and/or investments by working long hours in remote locations. Finding themselves in relationships with partners who simply aren't in the same league financially, they're seeking protection for the assets they've worked very hard to accumulate. While some lawyers are sceptical about BFAs, others support their use. So, when might they be useful? And will they work when you need them most? Knowing your stuff A BFA that is signed before a couple is married serves the purpose of setting out the division of assets in case of divorce (or, for a de facto couple, the termination of the relationship). A BFA can also be used during a relationship to set out what happens if it breaks down. Damien Bowen discusses the advantages and disadvantages of prenuptial agreements. BFAs can also be used when a couple that is divorcing or separating is able to come to an agreement about the division of assets as an alternative to court orders. This can provide an effective short cut, enabling both parties to move on with their lives rather than get involved in the litigation process and perhaps wait many months for a judge to decide on the division of assets for them. The complications BFAs are not always straightforward. Asking your partner or fiancé(e) to sign a legal agreement spelling out the division of assets in the event of divorce or separation can be uncomfortable. No doubt this will remain the case unless BFAs become more common. Another concern is the fact that courts across the country have set aside BFAs for a variety of reasons. These have included cases where: • The agreement was obtained by fraud, including non-disclosure of assets. • The agreement was found to be unconscionable (for example, one party provided evidence of being bullied or pressured into the agreement). • There was a material change of circumstances, such as the birth of child, so the carer or child would suffer hardship if the BFA was not set aside. • Circumstances arose after the agreement was signed that made it impracticable for the agreement, or 83