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Binding Financial Agreements and Family Court

Discussion in 'Legal Issues' started by 2935, 12th Dec, 2016.

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  1. 2935

    2935 Well-Known Member

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    This post is sort of an extension of thought from my previous thread on Trusts and the family Court.

    So if you have a moral issue with Divorce/Separation planning please don't comment. Experience here has taught me that people will tend to PM instead of posting when there is a post reply from someone questioning why this is needed at all etc - well you either know or you don't.

    OK so now for the scenario so far.

    A male in his 50's has accumulated a decent sum. He intends on buying a house and investing the rest in shares. He then wants to marry (a young and attractive Asian female) and maybe have kids.

    Should the marriage not work out (what's the chance of this with a 20 year plus age gap!? Not much but he accumulated his sum by preparing for the worst in most things) he wants to protect what he has worked had for.
    In this circumstance how much protection would a Binding Financial Agreement offer? Would he end up being kicked out of his house after say 10 years of marriage? Would he loose some of all of his shares? What about that Trust he is the Trustee and Appointer of?

    In the ideal world the new wife would agree not to make a claim on the shares he has purchased prior to the marriage even though she would benefit from the dividends throughout the marriage. She would also agree not to make a claim on the house even though she lived in it.

    I somehow have the feeling that an agreement such as this would not last long in the Family Court....does anyone care to comment?
     
  2. larrylarry

    larrylarry Well-Known Member

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    General view of the court: long marriage, equal division of assets and liabilities including assets acquired prior marriage. Look at s75 and s79 of the Family Law Act.
     
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  3. Ross Forrester

    Ross Forrester Well-Known Member Business Member

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    I have known a few people who have set up BFA's.

    They have to be just and equitable. So if you say "everything I own now and all future income and capital from that will be all mine" will probably not work.

    Both parties need seperate legal advice and they can be costly.

    If you hide assets or do something like that the BFA can be set aside.
     
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  4. RPI

    RPI Property Lawyer, Town Planner Business Member

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    I am not a family lawyer but employ several. Below is my rough take.

    BFA's are $6,500 plus GST for the drafting lawyer and around $2,000 plus GST for the advising lawyer for the other partner.

    Thorough disclosure of all assets is key. If one spouse is to lose income while staying home and raising children then making a financial contribution in the event of divorce is reasonable. This contribution can come from the income and assets accumulated during the relationship.

    On a related note, if the husband owned anything in a trust structure before that they met, the future spouse should never receive a distribution directly from this trust.
     
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  5. Terry_w

    Terry_w Tax and Structuring Lawyer Business Member

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    BFAs can be valid and binding - the law says so.

    BFAs are contracts so they could be invalid under contract law like any contract if there is - undue influence, unconsionability, etc

    They can also be invalid under the family law legislation.

    Anyone contemplating a BFA should read the relevant laws. See ss 90A -90Q Family Law Act, especially s90U and 90K.
     
  6. Marg4000

    Marg4000 Well-Known Member

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    If children bcome involved their legal rights probably cannot be signed away, so they would possibly have some claim over assets.
    Marg
     
  7. Yson

    Yson Well-Known Member

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    Indeed, this is a complicated story, but would like to know or learn more if ppl can share
     
  8. thatbum

    thatbum Well-Known Member

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    Seriously, this issue again? As always, the answer is "how long is a piece of string". It largely depends on the circumstances, including things like the size of the asset pool, the length of the relationship, and how 'unfair' the BFA is.

    Which of course depends on what a division of assets would have looked like in the first place.

    So going back to square one, the answer is: Go get specific legal advice.
     
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  9. larrylarry

    larrylarry Well-Known Member

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    I agree. I often have people asking me and telling me what friends said. My reply is pretty standard - each case is different and unless your friends are family law practitioners, speak to a lawyer trained in the area.

    Having a general idea doesn't go far enough. Specific advice is preferable.
     
  10. 2935

    2935 Well-Known Member

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  11. Terry_w

    Terry_w Tax and Structuring Lawyer Business Member

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    I am no family lawyer but think that would be blown out of the water easily as it makes no provision for the spouse at all. You don't mention if she is working or not, but if not how is she to support herself. Does she have any skills? What sort of job could she get? Where could she live if you split up. Are there children, will there be? Any provision for them?
     
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  12. larrylarry

    larrylarry Well-Known Member

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    Difficult to know what the future holds. OP will surely get the proper advice in due course. As for lack of provisions for spouse, I wonder about the interaction between BFA and Succession Act.
     
  13. Terry_w

    Terry_w Tax and Structuring Lawyer Business Member

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    The latest law society journal had an update on an interesting case:
    Kennedy & Thorne [2016] FamCAFC 189

    Bloke worth $18mil, wife worth not much. He was 67 when they met and she was 37 and living overseas.

    A BFA was entered into.

    Later separation and she challenged the validity of the BFA based on duress. He died, but proceedings continued.

    She lost.
     
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  14. larrylarry

    larrylarry Well-Known Member

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    Didn't read the judgment but this: Binding Financial Agreement Not Unlawful For Duress As Wife Received Clear Advice Not to Sign – Expert Family Lawyers

    This is instructive: "Relevantly, the trial judge found that the wife’s interest lay in what provision would be made for her in the event the husband pre- deceased her, and not what she would receive upon separation. And we note that the agreements provided for the wife to receive what she sought in that regard."
     
  15. 2935

    2935 Well-Known Member

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    Interesting reading Larry and Terry.

    As I am nearly 40yrs older than her (her 19 in one month , me 58) I suppose its a possibility I could predecease her.
    Looks like a BFA would cover me and my estate. The estate includes a portion of a Family Trust which reverts to my estate FYI.
     
  16. hobo

    hobo Well-Known Member

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    IANAL but that is not what I read from the previous posts....??
     
  17. Terry_w

    Terry_w Tax and Structuring Lawyer Business Member

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    Keep in mind this case was about duress. The woman was basically arguing she was pressured to sign this BFA. But the judgment said she wasn't pressured because she had legal advice and her lawyer advised her not to sign. She also signed a second BFA after the marriage.

    You will have to read the case, I haven't read it, only summaries. But you should also read similar cases, if you want to put in some effort - or get some legal advice.

    There are plenty of BFA cases and if you read enough you will get a feel about what makes them strong and what makes them weak.
     
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  18. larrylarry

    larrylarry Well-Known Member

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    What Terry said. Each case is pleaded differently.
     
  19. TMNT

    TMNT Well-Known Member

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    Going to be blunt here. I have no problems with what you are doing but if you seriously think a 20s girl from a third world country is going out with a 50s Aussie white guy for their looks or charm or personality, you are deluded.

    Money and visa will be two of the main considerations for them. Visa once obtained can't be lost, after a certain amount of time. Money, well that's something they will aggressively pursue possibly even unethically. Eg emptying out accounts, siphoning, putting their name on assets etc

    I'm no lawyer but from what I've been told by people going through it bfas are pretty Not water tight
     
  20. Marg4000

    Marg4000 Well-Known Member

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    Sadly, the above is probably only too true.

    Yes, it can work out, but the odds are heavily stacked against you.

    Over the years two of our friends went down this avenue. Each found a pretty young girl in SE Asia who vowed undying love. Age gap around 15-20 years. Once moved to Australia and married, priorities were identical:
    1. Get permanent visa.
    2. Send money home. Mum needed this, father got sick and could not work, brother needed that, auntie had to have.....
    3. Get pregnant.

    Once pregnant, kick out hubby and get lawyer, safe in the knowledge that the single parent pension would kick in and a life on welfare guaranteed at an income only be dreamed about in her homeland. And child support!

    And forget any prior financial agreements. Once children come into the mix their needs MUST be considered.

    And then bargain access to child, willingness depending on extra cash handed over.

    Sorry to be cynical, but still saddened at what befell two good men. One ended on a happier note when son in his early twenties stayed here with his dad when mum went back to her family in the Philippines.

    Good luck!
    Marg