Living together is a milestone in any relationship.
While it’s exciting to be thinking of a new life together, it’s normal to wonder how the move will affect your financial future.
Legally, de facto couples have effectively the same rights and obligations as married couples.
Essentially, any assets or debt brought into a relationship individually, or accumulated during the relationship jointly, can be considered communal or shared property, and could become subject to a property settlement claim if the relationship ends.
For younger couples this may not be a consideration. However, for those who have had time to build an asset pool, or those entering a second relationship with accumulated assets from a previous relationship, this may be a worrying issue.
What if there was a way to put your mind at ease about the financial consequences of moving in together?
Joanna and Peter are moving into a townhouse they bought together in Port Macquarie. Joanna has a couple of children from a previous relationship and she feels strongly about protecting the nest egg that she’s been building for them. Whilst she’s happy about the move, she feels uneasy about what will happen if things don’t work out.
Joanna and Peter have a heart to heart about her fears and decide that they each will keep the assets they already own and will split the assets they create together. They write down their arrangement in a binding financial agreement and now know exactly what will happen if the unthinkable happens.
They feel more at peace and can focus on the move and creating their new life together.
What is a financial Agreement?
A financial agreement is a lot like an instruction manual for your financial future. It contains the details of each parties’ assets and liabilities, and describes what will happen to those financial things if you separate.
Financial Agreements are a legal tool, created by the Family Law Act, that couples can use to document how assets and liabilities are to be treated, should the relationship come to an end.
The Family Law Act makes Financial Agreements accessible to all couples, to promote private agreement and certainty, and minimise the burden on the Family Court.
You can make a financial agreement either before you move in together or get married, or during the relationship – making financial agreements a great option for those who want to address financial issues up front.
Financial Agreements can address many issues, including:-
- how assets and liabilities accumulated separately before the relationship are dealt with;
- how jointly acquired assets will be dealt with and managed; and
- how individual and jointly owned property will divided should the relationship break down.
Financial Agreements allow couples to take control their finances and make their own decisions and choices about how they will be managed.
This might be particularly pertinent, for example, for a party entering a second relationship, who wants to ensure that assets previously accumulated are passed down to his or her children, rather than become a part of the property pool of the new de facto relationship.)
Considering that money problems are the number one reason for relationship woes and breakups, it makes sense that a couple should be proactive in their financial affairs.