Protecting assets is essential for safeguarding your financial future.
Whether you own property, a business, or other valuable assets, taking proactive legal steps can prevent financial loss in case of relationship breakdowns, disputes, or unforeseen circumstances.
In Australia, family law governs how assets are handled in relationships, marriages, and de facto partnerships.
While courts aim for fairness, asset division does not always favour the person who accumulated the wealth.
Fortunately, there are legal strategies to ensure your property remains secure.
When entering a relationship, facing separation, or managing business assets, taking proactive steps can provide financial security and peace of mind.
This guide explores practical strategies to secure your assets before, during, and after a relationship.
How Can You Legally Protect Your Assets Before Entering a Relationship?
Before entering a serious relationship or marriage, it is wise to consider asset protection.
While discussing finances may feel uncomfortable, it can prevent future legal disputes and ensure both partners understand their financial rights.
Here are some ways to protect your assets before a relationship begins:
1. Create a Binding Financial Agreement (BFA)
A Binding Financial Agreement (BFA), commonly known as a prenup, outlines how assets and finances will be divided if a relationship ends.
BFAs are legally enforceable under the Family Law Act 1975 and can be created before, during, or after a relationship.
They must be signed by both parties, and each person must receive independent legal advice for the agreement to be valid.
2. Keep Pre-Owned Assets Separate
If you own a house, investment property, or savings before entering a relationship, keeping them separate can reduce the risk of them being included in a property settlement. This means:
- Not using joint funds to maintain or renovate pre-owned properties.
- Keeping separate bank accounts for personal savings and investments.
3. Use Trusts for Asset Protection
A trust can help safeguard assets, especially if they are intended for children or future investments. Trusts ensure that assets are controlled by a trustee rather than a single individual.
However, courts may still investigate whether a trust was established to defeat a partner’s legal claim.
4. Maintain Accurate Financial Records
Having detailed records of your financial contributions is essential. Keep documentation of:
- Property ownership
- Mortgage repayments
- Business assets
- Inheritance and gifts
If a relationship ends, clear financial records can help prove ownership and prevent disputes over asset division.
What Steps Should You Take to Safeguard Your Assets During a Divorce or Separation?
If you are going through a divorce or separation, it is crucial to act quickly to protect your assets.
The Family Law Act 1975 requires a fair division of property, but courts do not always split assets equally. The following steps can help safeguard your financial future:
1. Seek Legal Advice Immediately
Consulting an experienced family lawyer ensures you understand your rights and options. A lawyer can guide you on asset division and help you take action to protect your property.
2. Secure Your Finances
- Open a separate bank account to prevent financial control by your ex-partner.
- Monitor joint accounts to ensure funds are not being withdrawn unfairly.
- Freeze joint credit cards if necessary.
3. Identify and Protect Key Assets
Make a list of all assets, including:
- Property and real estate
- Superannuation accounts
- Business interests
- Investments and shares
Ensure these assets are correctly valued, as undervaluing them may result in an unfair settlement.
4. Review Joint Debts and Liabilities
Joint debts, such as mortgages or loans, do not disappear after separation. Both partners remain responsible unless debts are refinanced or settled through a property agreement.
Inform creditors about your separation to avoid unexpected liabilities.
5. Apply for an Injunction if Needed
If you suspect your ex-partner may sell or transfer assets unfairly, you can apply for a court injunction to prevent this.
This legal order stops assets from being sold, hidden, or moved until a final settlement is reached.
Are Binding Financial Agreements (BFAs) Effective in Asset Protection?
A Binding Financial Agreement (BFA) is one of the strongest legal tools for protecting assets, but it must meet strict legal requirements to be enforceable.
1. What Makes a BFA Legally Binding?
For a BFA to hold up in court, it must:
- Be in writing and signed by both parties.
- Include full financial disclosure from both partners.
- Have both parties receive independent legal advice before signing.
- Not be influenced by fraud, unfair pressure, or misleading information.
2. Can a BFA Be Overturned?
While BFAs are legally binding, courts may set them aside if:
- They are found to be unfair or unreasonable.
- One party was pressured into signing.
- A significant financial change has occurred, such as disability or hardship.
- The agreement does not provide for children’s financial needs.
For maximum protection, it is important to have a well-drafted BFA prepared by an experienced family lawyer.
How Does Australian Family Law Handle Business Assets in a Property Settlement?
If you own a business, a divorce or separation can put its future at risk. The court considers business assets part of a property settlement, even if only one partner was actively involved in the business.
1. Are Business Assets Included in a Divorce Settlement?
Yes. If a business is considered marital property, its value may be divided between partners. Courts assess factors such as:
- The business’s financial value
- Each partner’s contribution to the business (financial or non-financial)
- Whether the business was established before or during the relationship
2. How Can You Protect My Business from a Divorce?
Set up a BFA: A Binding Financial Agreement can specify how business assets will be divided.
Establish a Trust: Holding business assets in a trust can prevent them from being included in a settlement. However, courts may examine whether the trust was set up to avoid legal claims.
Separate Personal and Business Finances: Mixing personal and business assets may increase the likelihood of the business being considered marital property.
3. What Happens If Both Partners Own the Business?
If both partners have a stake in the business, options include:
- One partner buying out the other’s share.
- Selling the business and dividing the profits.
- Continuing as business partners (if both parties agree).
Seeking legal and financial advice is essential to determine the best course of action.
Safeguarding Your Future: Take Action Today
Protecting assets requires proactive planning, whether you are entering a relationship, going through a separation, or managing a business.
Legal strategies like Binding Financial Agreements, trusts, and accurate financial records can help secure your property and investments. Acting early can prevent disputes and ensure your financial stability.
If you need expert legal advice on protecting assets, Ipswich Family Lawyers can help. Our experienced team provides personalised solutions to safeguard your wealth.
Contact us today to schedule a consultation and take control of your financial future.
