Whether you are married or in a de-facto relationship with your partner, putting the appropriate framework in place to easily and fairly divide your assets in the event that you separate is very important. A Financial Agreement (“prenuptial agreement”) helps to do this by representing both of your wishes in a way that is recognised by the court, with the aim being to make the process easier if the need to redistribute your common assets ever arises.
Also known simply as a “prenup”, a common misconception about these contracts is that they are only for couples who are about to get married. While this is certainly one situation in which a prenuptial agreement is signed, the truth is that any two individuals in a relationship can enter into one of these contracts before, during or after the relationship.
So how do you know if a Financial Agreement is right for you and your relationship?
Contrary to what many people think, these agreements aren’t only beneficial to couples in a high income bracket, or for people who earn significantly more than their partner. A “prenup” is a great option for any situation where one or both people involved are bringing significant assets into the relationship, or to protect anticipated future assets, such as a future inheritance. This can include property, businesses in your name and any money that might be in a savings account. It’s also a good way to determine how you will split any common assets you may already have – such as a house or a car – if you happen to end the relationship. As many of us know, deciding who gets what after a break up or a divorce can get very messy very quickly, so it’s wise to agree upon a civil resolution while you are in the midst of love.
However, for some people, it’s not about the assets at all; it’s about the debts. Throughout the prenuptial process, you and your partner can contractually agree on how you will go about paying off important financial obligations such as outstanding loans, university fees or credit card debt. Along with this, you can also get into detail about how this will influence the amount each person contributes to other costs like household fees and bills etc.
While nobody enjoys thinking about the potential for their relationship to not last the distance, a Financial Agreement provides a foundation of open communication and transparency on which two people can build their lives. Not only does it ensure that you both have your respective assets accounted for, but it can help you to avoid a lot of post break up stress if you ever have to go your separate ways.