Bowen Buchbinder Vilensky

Archive for March, 2015

What You Risk by Not Finalising Financial Arrangements When You Separate
Thursday, March 26th, 2015

damienbowen

By Damien Bowen, Director at Bowen Buchbinder Vilensky Lawyers

26 March 2015

Something I’ve seen a lot of lately is people finding themselves in all sorts of problems as a result of not properly ending the financial relationship with their former spouse or de facto partner when they separate.  These situations seem to arise in one of three ways:

  1. The couple never discussed, or never finished discussing, the division of their assets and simply moved on with their lives;
  2. They discussed it and came to an agreement but never formalised it; or
  3. They discussed it, agreed, and formalised that agreement, but not in the proper way.

When this happens, it often leads to difficulties with ownership of property or exposure to liabilities.  But the big problems typically arise when they’ve gone their separate ways, then one person:

  1. Enjoys a windfall like a lotto win, gift or inheritance, or begins to make a lot of money from business venture; or
  2. Suffers a significant loss, such as a poor investment in shares, property or some unsuccessful business venture.

In these circumstances, there is a very real risk that a person could, quite properly, apply to the Family Court to try to ‘level the playing field’.  While the Court would take the source of the gain or loss into account, it typically applies a very broad brush approach.  If financial arrangements are not finalised in the correct way, the Court might well order an adjustment one way or the other.  Even if the Court decides it should not make an order, there would be significant legal costs incurred by both sides.

The only way to avoid this from happening is to enter into consent orders or a binding financial agreement following the breakdown of a marriage or a qualifying de facto relationship.  No other agreements or documents will prevent the Court from dealing with your matter.

For binding financial agreements to satisfy legislative requirements, each party must have received, among other things, independent legal advice.  This is not the case with consent orders though.  In relatively simple matters these can be prepared by the parties themselves with minimal help from lawyers.

To enter into consent orders you need to down load a Form 11 Application for Consent Orders from the Family Court of Western Australia website www.familycourt.wa.gov.au.  These are completed by both parties, then executed in the presence of a qualified witness (eg a lawyer or a JP).  They are then filed in the Court at a cost of $155.

The long and the short of it is this: if you want to be financially independent moving forward after the breakdown of a marriage or de facto relationship, putting an end to your financial relationship is an absolute must.  Those who neglect to deal with this, do so at their peril.

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What is a Binding Financial Agreement, and Why is it Useful?
Friday, March 20th, 2015

Damien Bowen

By Damien Bowen, Director at Bowen Buchbinder Vilensky Lawyers

20 March 2015

A Binding Financial Agreement (BFA) is an agreement between two parties in which they set out how assets are to be dealt with in certain circumstances.  There are three types of BFA :

  1. An agreement made before a couple marries, setting  out how their assets will be divided if the marriage comes to an end (a Pre-Nuptial Agreement).
  2. An agreement made during a happy marriage  setting how  assets will be divided if the marriage comes to an end; and,
  3. An agreement made after divorce recording how they have agreed to divide their assets.

These three types of BFA are also available for people in de facto relationships, whether straight or gay, where:

  1. They are about to start living together;
  2. Are living together; or
  3. Are separated.

To be binding:

  1. The agreement must be in writing;
  2. Each party must have independent legal advice before they sign the agreement;
  3. The parties and their lawyers must all sign the agreement.
  4. One party holds the original and the other the copy.

BFA’s can only deal with property and spouse maintenance.The definition of property is very wide and  encompasses house, furniture, cars, a business, shares, investments, intellectual property rights, patents, jewellery and artwork, superannuation and entitlements in trusts and estates.

Typically, BFAs have the following uses:

Before marriage.  In cases where there is a wide disparity in the wealth of the two individuals, a BFA can essentially get this disparity out of the way of the relationship, by resolving, up-front, how assets would be divided should the relationship come to an end.

During marriage.  In cases where one of the couple benefits from, say, a major inheritance, a BFA can help remove tensions about what would happen to assets should the relationship come to an end.

After separating.  A separating couple can agree on how they are dividing their assets using a BFA, rather than through proceedings in the Family Court, as a quicker and less stressful way of resolving matters, so that they can move on with their lives.

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