With interest rate rises and the increased cost of living, some people are turning to ‘the bank of mum and dad’ for help with buying their first home. Understandably, parents are often cautious of gifting money or property which may be subject to a later claim from a current or future partner. Our family law team are seeing a trend towards young people purchasing property prior to settling down in a relationship. This can make things tricky when one party enters a relationship with assets such as a house, while the other party’s assets may be modest.
Provided that both parties to the relationship are on the same page, steps can be taken to protect assets and contributions made to property in the event of a later separation. A Binding Financial Agreement can be made at any stage of the relationship, whether that be before you have moved in together, during the relationship or even after separation. The agreement can define how assets, liabilities and superannuation are to be divided in the event of separation. For example, if one party came into the relationship with a house, or if parents gifted or loaned a large deposit, the agreement can be drafted to protect that asset or a specified proportion of that asset from a claim by the other party in the event of separation.
For a Binding Financial Agreement to be binding, both parties to the relationship must agree to the terms and must each receive independent legal advice about the effect of the agreement on their legal rights, and the advantages and disadvantages of entering into the agreement.
Being proactive about protecting assets can save heartache, stress and cost down the track. To find out more about future-proofing assets, contact us to speak to one of our experienced family law practitioners.