We live in interesting times, so the saying goes. Over the past 20 years there has been a shift in how people form relationships with an increase in the number of relationships where a couple lives together either in a de facto relationship or for a period of time before they later marry.
According to the Australian Bureau of Statistics, in the early 1990s just over half of all marriages were preceded by couples living together. By 2010 this had risen to almost 80 per cent.
Living together prior to marriage or living in a de facto relationship can and does have an impact upon families, particularly in a rural setting. It is not uncommon for rural families to welcome their children’s partners into their homes and properties and for them to become closely involved in family and business operations.
Increasingly we see families wanting to make sure that their succession planning takes into consideration what might happen on the breakdown of a marriage or a de facto relationship, particularly in circumstances where a child might be part of the family farming operation or might stand to take over or later inherent significant assets or property. This can give rise to considering putting in place agreements about what might happen on the breakdown of a relationship as part of any intergenerational succession
These agreements are referred to as “prenuptial” or planning agreements or alternatively, financial agreements. These types of agreements can allow parties to make provision for how, in the event of a relationship breakdown, the division of property, liabilities or superannuation will be dealt with. They can also be used to “quarantine” things such as initial contributions or any inheritance that may be received either prior to or during a relationship.
Financial agreements can also be used to record how any contributions from third parties might be dealt with. For example, a parent may lend or gift money or property to a child and wish to have a written understanding as to how the funds are to be used and whether they need to be repaid at a later time or on the breakdown of a relationship.
Financial agreements need to be prepared properly and take into consideration not only the unique circumstances of the parties, but also the technicalities of the legislation that governs these types of agreements.
A financial agreement that is properly prepared will be enforceable at a later point in time, so long as it has been prepared in accordance with the strict legislative requirements.
This post originally appeared in the Spring 2014 issue of Border Living Magazine