(This article was published on 12 September 2017. Since then, the High Court of Australia has handed down a decision that will significantly affect FA’s moving forward – please find the updated article here).
As we enter into the start of Spring season, usually we also see a proportionate increase in the number of weddings in the coming months as well. And while this may be good for wedding planners, photographers, venues and florist, etc, the bride and groom are usually caught up in a raft of planning challenges, interstate and international guests, table seating allocations and the like.
An issue however that is not as prevalent or openly discussed between the couple, or even within their respective families is the matter of personal assets and wealth that each respective partner brings into the marriage. Many Australians are accustomed to seeing American television drama shows with the term “pre-nup” thrown around, however in Australia, specifically with regards to relationships, they are referred to as ‘Financial Agreements’ (‘FA‘) and there generally exists three types: pre-marriage, during-marriage and post-marriage FA. The pre-marriage FA aka, the ‘pre-nup,’ while expensive to draft and execute properly, can save and avoid the parties a costly legal dispute about asset distribution should the marriage end (with the caveat that significant changes to any one of the respective partners have not occurred since the execution of that FA). Should the respective parties undergo a significant life altering event (e.g., permanent injury affecting future earnings, quitting ones’ job to become the primary carer for a child, acquiring a substantial inheritance, etc), then an amendment made to the pre-marriage FA to become a during-marriage FA may be required to maintain the validity of the document.
Notwithstanding the above, the above process is not the only way and/or means for an individual to protect their assets in the event of death or marriage dissolution. Other considerations include executing a valid Will (see our Wills article), considering the necessity of trust structures (which also aids with tax minimisation if set up properly) which assists in the protection of ones’ assets in the event of a dispute during the divorce stages.
If you are planning to get married, we would advise that you seek legal advice as early as possible (this mainly refers to the setting up of personal and/or corporate trust structures) to safeguard your pre-marital assets from being melded into the family asset distribution pool should you undergo the mishap of going through a divorce.
The above article is not legal advice and is not specific. It is general information and we advise that you seek legal assistance from a lawyer to choose what is right for your personal circumstance. If you would like to talk to a lawyer about any of the contents in this article, please feel free to contact us at info@contactlawyers.com.au for call us on 03 5367 3100 to make an appointment.
