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Is a financial agreement right for your family?

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Nicole Kidman and Keith Urban reportedly have one, as do Angelina Jolie and Brad Pitt. We’re talking binding financial agreements (BFAs), legal documents that set out how finances, property and other related assets will be handled in the event you and your partner part ways, to help avoid a financially messy separation.

Though often colloquially known as ‘pre-nups’, BFAs can be made at any point in a relationship, not just before nuptials. If you’re just starting a family or are growing your brood, then now might be a good time to think about one as you go through a time of financial and potential long-term career shifts.

So what can a BFA cover?

If you decide to draw up a financial agreement, it might specify a number of things, including…


  • What will happen to financial assets and liabilities, including those assets owned prior to and acquired during the relationship. This could be particularly useful in the case of business ownership or for assets with sentimental value, for inheritances or in the case of blended families.


  • Issues relating to financial support of children. As an example, a BFA might specify sufficient income to ensure the continuation of education and extra-curricular activities. It’s important to note, though, that a BFA does not cover child custody matters – these are dealt with by the family court.


  • Financial support of one partner by the other after the breakdown of a marriage or a de facto relationship. “The experience of family lawyers will be that when children come along, the roles undertaken by a couple to that point will change, whether consciously or otherwise,” says Dan Bottrell, partner with Jones Mitchell Lawyers*. For many families, he says, this will involve one parent leaving the workforce, perhaps for some time, which can see skills become dated and finding work in the future become more difficult. Separation during this time can mean significant consequences for the parent whose career has been put on hold, Dan says. This disadvantage can have long-reaching effects, with over 60 per cent of divorced single women describing themselves financially as “just getting along” or “poor/very poor” at retirement age. This compares to just 28 per cent of their married counterparts.

A BFA can recognise that one parent has sacrificed career advancement and income for the good of the family and financial support can be agreed on to compensate for this.


How do we talk about it?

It can seem tricky to raise the possibility of a BFA, particularly if you’re several years into a relationship. Rather than focusing on the negative ‘what if’ connotations, though, you can talk about it as an important step in putting the needs of your children or future children first.

“Separation is hard,” says Dan, but “a well-drafted financial agreement can save couples and their families from the financial and emotional strain of enduring the end of a relationship without any definition as to what is to occur at that point.” He sees a BFA as a ‘blueprint’ to direct couples through the process. Without one, financial matters may need time to be resolved through lawyers, involving a period of anxiety and conflict, and in worst-case scenarios, Dan says, a court may decide what happens with assets.

If you have the chat with your partner and do decide to draw up a BFA, Dan says the best approach is to consult with experienced or specialist family lawyers who have particular knowledge in preparing and advising on financial agreements. He explains that while these agreements are not 100 per cent watertight, they’re currently the only option to lay out financial agreements in the event of a separation with some certainty.

Consider your BFA an insurance policy to help avoid unneeded extra difficulty should a separation occur – something that could be good to have, depending on your situation, but that you hopefully won’t need to use.

*The contents of this interview are not intended to be a complete statement of the law on any subject and should not be used as a substitute for legal advice in specific fact situations. Jones Mitchell cannot accept any liability or responsibility for loss occurring as a result of anyone acting or refraining from acting on any material contained in this interview.

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