Binding Financial Agreements (BFAs) are a type of pre-nuptial agreement that couples set up before they marry. While nobody wants to plan for the worst at this stage, this kind of agreement is a good idea for some couples.
When might you want to set up a BFA?
1. You've Already Got Children
Some couples set up BFAs when they enter into a second marriage. They often use this agreement to protect the inheritance of their children from the previous marriage or an earlier relationship.
So, for example, if you already have children now, then you may want to secure your current assets for them. You worry that these assets might be affected if you end up getting divorced. If your spouse has rights to them, then there is less money for your children in the future.
If you set up a BFA with your partner, then you can both specify what happens to certain assets if you do separate or divorce. You can preserve any assets that you want to pass on to your kids, including any you might have with your new partner.
2. You Have Valuable Family Assets
While you plan to get married as equals and share everything after marriage, your current assets aren't necessarily at the same levels right now. One of you may come from a wealthier family than the other.
In this situation, you may have inherited money, property or family heirlooms. You may run or be part of a successful family business.
These assets could be up for grabs if you ultimately divorce. Your spouse could try to get half of a previous inheritance or to force the sale of property or heirlooms to get a share. They may want a stake in your family business or money from it.
If you want to keep your assets separate, then a BFA helps you do this. You can take these assets out of the equation so that they stay in the family.
3. You Have Doubts About Your Partner
While everyone wants to marry someone for the right reasons, there are times when you might doubt your partner's motivation. If you're worth a lot more money than your partner, then you may have concerns that they are only marrying you for your lifestyle and the fact that they'll get financial security if you ever do divorce.
If you set up a BFA, you can state how much of your estate your spouse would get after a divorce. This gives you peace of mind that they are marrying you for the right reasons.
Setting up a BFA can be a complicated and sensitive process. To find out whether this is an appropriate solution for you and your partner, contact family lawyers and ask for their advice.Share