It’s not uncommon for two people with significantly different amounts of wealth to get married. And likewise, it’s not uncommon for these people to separate and divorce, resulting in a separation of the couple’s assets.
Now, although this might seem like a relatively straightforward and uncomplicated situation, the truth is that it usually isn’t. Dividing your assets can be very hard, especially if you didn’t sort out a binding financial agreement with your family lawyers before you were married.
In short, financial agreements are designed to protect your property and other assets when you get married. That way, if you separate, you won’t lose your previous wealth. Below are five of our top reasons why you should always consider a financial agreement.
- Your Assets Will Be Protected
As unpleasant as it might be to think about separation before you even get married, the truth is that you need to. Signing a clear financial agreement well in advance will ensure your assets are fully protected if you do get separated. This reduces the risk of one partner taking a significant portion of the wealth that the other entered the relationship with.
- The Separation Process Will Be Easy
Separation is never easy, but having a clear financial agreement in place will help the process along. The chances of requiring a court hearing for asset separation will be much lower, and you will more than likely get your pre-marital wealth back.
- Your Prior Assets Will Be Excluded From the Asset Pool
When a couple’s assets are being divided following a separation, they are first placed into an “asset pool”. However, assets outlined in a financial agreement will usually be excluded from this pool, which means they will be protected. It’s a good idea to think carefully about what sort of things you want to include in the agreement. Consider:
- Sentimental items or family heirlooms.
- Valuable cars and property.
- Jewelry, collectibles, antiques, and other valuable physical items.
- Any investments.
In general, any assets you have when you enter a relationship, physical or not, should be added to your financial agreement.
- It Makes Dividing Assets So Much Easier
If you use a well-written financial agreement, you will find asset division so much easier, regardless of what you have. For starters, all relevant items can be excluded from the asset pool prior to the division process and without the need for a court order. And on top of this, it will be immediately obvious what things have been acquired by and need to be thought of as belonging to both partners.
- They Apply to De Facto Relationships too
Binding financial agreements don’t just apply to marriages. In actual fact, they can apply to de facto relationships as well. If you’re in a serious de facto relationship, we’d highly recommend speaking with a family lawyer about a financial arrangement. They will be able to advise you on the correct steps to take.
Ultimately, financial agreements are designed to protect both party’s assets when they are entering into a serious relationship or marriage. They should be drafted with the help of an experienced lawyer, and they can make things a lot easier if you ever have to work through a divorce.
Want to find out more? Speak to your local family law firm today!