If you want to have more control over your finances during a relationship or in case of a breakdown, a binding financial agreement (BFA) may be worth considering. Commonly known as a “prenup,” this legal document can change the standard process for dividing property and assets in a legal dispute.
There are different reasons why a financial agreement might be necessary. For instance, a BFA could help both parties to protect specific assets from future claims by the other party, especially if they have children from previous relationships. This type of agreement is generally enforced to safeguard the future benefit of any children in previous marriages and can be made in conjunction with an agreement under the Succession Act. Alternatively, a financial agreement may be used to enable one party to protect certain assets from future claims by the other party. Additionally, after separation, a BFA can operate as a release from future spousal maintenance as long as there is a satisfactory property settlement.
Although there are other situations where a financial agreement may be appropriate, court proceedings via an application for consent orders may be more suitable if the parties are separated, as it can simplify enforcement if needed.
It is essential to keep in mind some caveats if you are considering a financial agreement. First, a BFA is not required to be fair, but a property settlement ordered by the court has to be ‘just and equitable.’ Second, a financial agreement cannot be set aside on the grounds of hardship if the parties have no children together. Third, a financial agreement of the prenuptial kind should be weighed against the option of not having one at all, which can allow for freedom to negotiate a settlement if necessary.
Binding financial agreements are beneficial for the preservation of assets, but they involve extensive considerations that must be evaluated to assess their appropriateness in your circumstances. A lawyer can advise you of the potential risks and terms that could be included to protect your financial interests.