Relationships often bring exciting milestones like moving in, entering de facto relationships, buying property, or starting a family. However, while these steps symbolise growth and commitment, they also come with significant financial implications.
If you’re in de facto relationships, engaged, or marrying, safeguard your assets to protect your financial security. This blog explores strategies to protect your assets during relationship changes and why planning ahead is essential.
1. Open Conversations: The Foundation of Asset Protection in De Facto Relationships
The first step to protecting your assets is open and honest communication. While talking about finances might feel uncomfortable, it’s essential to have candid discussions about your financial situation, expectations, and goals early in the relationship.
Why it matters:
Having a shared understanding of financial expectations can prevent future disagreements and help both partners approach shared financial decisions with clarity.
2. Binding Financial Agreements: Securing Your Financial Future in a De Facto Relationship
One of the most effective ways to safeguard your assets is through a Binding Financial Agreement (BFA). People sometimes refer to these agreements as “prenups” or “cohabitation agreements,” depending on the stage of the relationship.
A BFA legally outlines how to divide assets and liabilities if a separation occurs. It provides peace of mind by setting clear financial boundaries and protecting each partner’s personal wealth.
When to consider a BFA:
- Before entering into a de facto relationship
- Get a BFA before marrying
- When purchasing property together
- If you’re receiving a significant inheritance or gift from family
A well-drafted BFA can also address future financial decisions, such as superannuation entitlements, and ensure that both parties have a clear understanding of what belongs to whom.
3. Protecting Property: Cohabitation and Property Purchases
Purchasing property with a partner is a major milestone, but it’s also one of the biggest financial commitments you’ll make together.
Without the proper legal protections, joint ownership can become a source of conflict if the relationship ends.
Here are some steps to protect yourself when buying property together:
- Determine ownership structure: Consider whether the property will be owned as “tenants in common” or “joint tenants.” Tenants in common allows you to specify the percentage of ownership each party holds, which can be useful if one partner contributes more financially.
- Put your agreement in writing: If you’re making unequal financial contributions toward the property purchase, it’s important to document this clearly. A financial agreement or declaration of trust can outline each party’s share of the property, which can prevent future disputes over ownership.
- Update your will: Major milestones, like purchasing property, are an opportune time to review or update your will to ensure your assets are distributed according to your wishes.
4. Long-Term Planning: Superannuation and Estate Planning
Another key area to consider is your long-term financial security, particularly in terms of superannuation and estate planning.
Superannuation can often be overlooked in relationships, but it is likely one of your most significant assets.
Ensure that you’ve nominated a beneficiary for your superannuation fund and regularly review your nomination, especially after major relationship changes.
Similarly, updating your will is essential to ensure your assets are passed on according to your wishes.
Life changes such as marriage, separation, or the birth of children should prompt you to revise your estate planning documents to avoid unintended consequences down the track.
5. Seek Legal Advice Early
Every relationship is different, and there is no one-size-fits-all solution for asset protection. Seeking legal advice early can help you navigate these complex situations and create a tailored strategy that aligns with your personal and financial goals.
Whether it’s drafting a Binding Financial Agreement, creating a cohabitation agreement, or protecting your assets during property purchases, working with a lawyer can give you the security you need during these significant life transitions.
In Conclusion
Major relationship milestones are exciting, but they also come with financial risks. By planning ahead and taking practical steps such as creating Binding Financial Agreements, protecting property, and reviewing your estate plan, you can ensure that your assets are safeguarded no matter what the future holds.
At Martens Legal, we specialise in guiding individuals through these transitions, providing clarity, empowerment, and peace of mind.
Contact us today to learn how we can help you protect your financial future.
