Tax Effective Pre-Nuptial agreements
See the Instruction Form
See the letter that Law Mutual sent to all WA lawyers warning them about the dangers
See the Article in The West Australian newspaper on 4 October 2004 regarding
on picture to enlarge.
Your dad is worried about your wife. Your dad doesn’t want to transfer the 5th generation
farm to you. This will make your Dad happy ….
When do they apply from?
On Wednesday the 27 December 2000 pre-nuptial agreements became law throughout Australia.
Before Wednesday the Family Court generally would not waste its time even looking
at a pre-nuptial agreement. They were not binding at law.
What are they?
Known officially as Binding Financial Arrangements (BFA s), the legislation heralds
a new era in Family Law, and will have many implications for financial advisers
when couples planning to marry consult them.
A BFA is a contract that sets out the division of assets should the relationship
breakdown. The agreement would also have an asset schedule attached listing the
respective assets of the client.
Who does it apply to?
A BFA can be made between couples who intend to marry, are married, or have been
married. Same sex couples and defactos have always been able to have a contract
It needs to be signed by both parties, and a certificate of legal advice must be
provided that the party concerned has obtained independent legal advice. The Binding
Financial Agreement is not legally enforceable until a lawyer explains the BFA.
does the lawyer ask?
What does a BFA deal with?
A BFA can deal with any or all property and financial arrangements. It can include
spousal maintenance, superannuation, and incidental or ancillary matters.
Why are they important?
BFAs result in greater certainty in property settlements. They allow couples who
do have a relationship breakdown to take control of their financial affairs.
The agreement allows practical financial matters to be dealt with in a tax effective
way. For example joint ownership of shares, real estate, or valuable personal commodities.
This results in greater certainty and avoids conflict over financial matters in
the event of a relationship breakdown.
A BFA may be particularly relevant in the scenario where one party is bringing considerable
family wealth into a relationship, for the protection of prior assets, or for farming
properties and family businesses.
Second marriages should particularly consider a BFA.
Is it a bad omen to do a BFA before you get married?
Not at all. Every couple should do a Binding Financial Agreement, as soon as possible.
You take out life insurance. You make a Will. It is good sense to make a BFA.
Don’t wait until there is a breakdown to discuss this protection. There are two
issues at war: Saving Tax v’s Reaping Revenge. Before you separate you can tax plan
with goodwill - Advisers and Tax Lawyers work in this area. However, if the marriage
falls apart, there is less interest in structuring for tax and more for just getting
out - or worse, inflicting as much savage pain as possible. If you left the Binding
Financial Agreement until it was too late then generally you go straight to a Family
Lawyer to start the war - kiss tax planning goodbye.
A BFA is only legally binding if signed off by a lawyer. However, Civic Legal
is a private law firm and only takes instructions from other Lawyers, Financial
Advisers and Accountants. Much of the hard work is clarifying the assets. This is
best done by your professional advisers, as they know you best. To help you we have
placed a questionnaire on our web page. Before you can see us we will need a referral
from your professional adviser.
You can provide a tax effective mechanism for the division of property if there
is a break down. Working with the professional adviser the tax lawyer crafts the
pre-nuptial agreement for capital gains tax, stamp duty and new entity tax.
Civic Legal is taking instructions now for tax effective pre-nuptial agreements.
After the consultation, where we charge our standard hourly fee, we generally give
a fixed price quote to draft the agreement.