She's On The Money - Binding Financial Agreements Q&A

Episode Date: September 21, 2021

Today we're joined by Lucy Percy from Head and Heart Estate Planning to talk all things Binding Financial Agreements.The advice shared on She’s on The Money is general in nature and does not consider your individual circumstances. She’s on The Money exists purely for educational purposes and should not be relied upon to make an investment or financial decision. Victoria Devine is an Authorised Representative of Australia Pacific Funds Management Proprietary Limited ABN 34 132 463 257 - AFSL 339151.See omnystudio.com/listener for privacy information.

She's on the money. She's on the money. Hello and welcome to She's on the money, the podcast for millennials who want financial freedom. Binding financial agreements. What are they? Who needs one? And are they actually worth it? My name is Jessica Ricci and I'm not a copywriter, but you should know me by now. And I am joining as always, Miss Victoria Devine. Hello, Miss Jessica Ricci. How you going? Fancy seeing you on a Wednesday episode. I know, I know. I always feel like I have big shoes to bill on a Wednesday, but today it's going to- I do apologize. Georgia apparently has a lot to do

and you are helping the team out to make sure this podcast gets in their ears every single Wednesday and it is very much appreciated. We love it. She's in demand. She's a busy woman, but today you're actually not going to hear too much from me because talking about binding financial agreements, I'm not a copywriter. I'm also shockingly not a lawyer. Oh, are you serious? sorry so you didn't lie on your application to she's on the money when you were trying to get employed by us absolutely not i did know that and i'm not a lawyer either jess and while i talk about binding financial agreements all the time as being really important i always say speak to a lawyer because that's what you absolutely should do so jess what are we doing today

we're gonna speak to a lawyer oh my god not me a real lawyer so we are lucky enough that lucy Percy from Head & Heart Estate Planning has agreed to come on the podcast today and answer all of our pervy questions, Jess. I had a really beautiful conversation with her earlier and I can't wait for you to hear it. I'm so excited. Let's jump straight in. We're jumping straight into this, Lucy straight into the deep end can you tell us what's a binding financial agreement and why do we need one? Okay so a binding financial agreement is as the name suggests an agreement a contract between two people it's going to operate in their lifetime so the key thing there is it's not going to cover you after death and we are contemplating people in a relationship and they want to set out

the guidelines and have some certainty about what is going to happen to the assets that they create together and what is going to happen to the assets that they own or control or create separate from each other which i think is really important and obviously like as a financial advisor i talk about these all the time but at the end of the day you're the authority in this area you are literally an estate planning lawyer so putting people's things in order is your bread and butter that you work with every single day but what kind of assets are we talking about are we talking about things that you've already done? Like what if I went and bought a house before I met Steve? Like is that something we'd put in there or is it only the stuff that we do together? No, absolutely. So

it can be things that you have accumulated before you were together or things that you do while you're together. I think there are most of the people who I refer to get binding financial agreements are in a situation where they have bought different assets to the relationship, they're doing their estate planning, but quite often they're living in one of the properties that the other has accumulated prior to the relationship and it's not as simple as saying you get out what you take in because someone might have often contributed to the mortgage repayments or capital improvement and so or you know if there's been a really great capital growth do you want that reflected in some way there's also tax benefits to living in the property that

say you might own as opposed to your partner and so you know it's a little bit tricky then saying let's just walk away with what we bought in. Yeah. And I think that that's a really important conversation to have as well. And I know in our She's On The Money community, this is a bit left field. Sorry, Lucy. But we've had people say, oh, I just tell my partner to transfer money that I use to pay my mortgage off, just named as rent so that they can never claim anything towards my house. Or if we break up, they can't say that they paid half the mortgage. Is that true? No, not at all. It seemed really smart and I was like,

let's actually ask a lawyer this question. No, there is no one-size-fits-all approach to what's going to protect your asset and quite often it might be a BFA in conjunction with, if you're owning property together, you can have property agreements, joint venture agreements, a will. You need a blanket approach and a BFA is a piece in the puzzle. most areas of the law can cut through um what you are purporting to do and they're actually

going to look at the facts of what was happening um and i think the other point to make with family law um when a relationship deteriorates it is not so much about what was yours what was mine it's about what sort of dependency has been created between the two people so even if we could put a line in the sand about this is yours that's mine and there's no difficulty in um you know saying that was rent only it is about that dependency and that's the way it is with estate law as well so um you know you can say what you want but the law is complex and dependency is a huge part of it not just what was yours yeah and that's exactly why we need people like you Lucy because it is different for everybody and it is one of those things where we don't actually

know and I think a good example of that is if a female or a male took all their time off to raise kids and then they went through a divorce 20 years later it's not actually who earned what is it it's very much based on who put what in and who put what in and what the dependency is right like that's what you mean when you say dependency right correct and missed opportunities so um you know if we had someone who's entrepreneurial or um built this incredible business and the other person was the stay-at-home or the primary carer so exactly the case for my husband and I right now that needs to be reflected so yeah definitely it is nuanced and so you know to add to that you know when you said it you know it does make lawyers important and so I would caution people

against hearing the word BFA typing it into Google finding a bot and filling it out because this is an area of law where you need legal advice attached to the documents okay important because at the same time I I'm very lucky Steve and I have a binding financial agreement it's no secret and we did go through a lawyer to set it up it was kind of a prerequisite of me saying you want to live with me here's the deal and thankfully he was like yeah okay no problems like that's about you protecting your business and she's on the money and you protecting Zella and everything that you've worked for, but in the same way, it was about protecting his income because he has a nice job and I would never want to turn around and, you know, bite him in the bottom, I guess you could

say. But that was an easy conversation. I mean, not super easy, but an easy conversation for me to have because I'm a financial advisor. Talking about money, talking about wills, doing all of that kind of stuff is just second nature to me. But at what stage does everybody need that and how do we go about that conversation? Yeah, absolutely. I think when we're talking about binding financial agreements, there are, I suppose, three things that I want you to think about. If you, your cell phone property, and you are not sure if you are in a, what we used to call de facto, but it's actually domestic, unregistered domestic relationship, go and get advice. If you are expecting an inheritance, or if you've had a business takeoff or an asset that has really

increase um then that might be a certain time to do it when there's a change in your earnings or your asset position um and the other trigger that i want you to think about is if your parents are separated or maybe one of your parents is widowed and they're talking about entering into a new relationship you can share this knowledge with them and say hey i'd feel so much more comfortable if you asked about and did a binding financial agreement so i always try and tell people absorb the information for yourself and then keep your ears peeled for your sister your mom your dad your aunt like share yeah and i think that one thing i've said on this podcast before and i'm sure you're probably going to subscribe to this as well lucy i don't mind being the bad guy you

want to bring me up and say oh victoria listen to this podcast victoria and lucy were saying we need a binding financial agreement blame it on us say we told you that you needed it to break the ice and have that conversation with your partner. Because it is really hard if you're sitting down one night having some stir fry being like, oh, hey, Lucy, I was wondering, have you thought about a binding financial agreement? It's a very different conversation than maybe using Victoria and Lucy as an icebreaker, which I think can be a little bit of a good stepping stone. So feel free to abuse that and use that however you like, my friends. But we said before what you can use them for and how that works, whether it's a business or whether it is, you know, inheritance, but can

it be used for other stuff as well? So, for example, if you planned on having a kid and it was agreed before time that you would take time out to look after that child, could you agree that your partner ends up paying you a sum of their income or puts it into super for you or something? Can that be in a binding financial agreement? Look, it's fantastic that people are having these conversations with their partner, whether or not that has a place in the actual agreement might not be appropriate so when we write documents and agreements we want them to be able to be really easily interpreted and applied and you know we don't want too many contingencies in the future that might not be able to be enforced so it might not be in your

best interest to have this really broad document that's trying to control everything and there are some things that you're just going to have to approach as a couple as life comes at you and what's appropriate at the time. But we really just want to take care of the nuts and bolts of your assets and things like agreements about what would happen if you had debts. It's like putting the rocks in the jar and then the sand might be all those things that you talk about and that flows through, but it might not all go in the agreement itself. But as long as you're talking about it, it's a complete plan. All right, Lucy. So maybe that one isn't something we can add to a BFA, but what are some other things we could add to BFAs that we need to be aware of?

Great question. The main thing that I would like to see your listeners protect themselves against in a BFA is sexually transmitted debt. So maybe you have a partner who has a business, maybe they've got, you know, I don't think we talk enough about gambling addiction, gaming addiction. Yes, it's so common. Yeah. On my first day of work as a lawyer, my boss said to me, if there's ever money missing and you don't know where it is, it'll be gambling. And that has really held true for me. Oh, that's so disappointing. That's such a good, like a helpful piece of information to be given on your first day, but also like heartbreaking in a way because it's so common. It is so common.

And I think that people are not aware of it. So, you know, just be aware that that is sexually transmitted by nature is often something that will be hidden. And it's, and yeah, exactly. And it's so hidden and people say like oh well it must be a certain type of person or it must be you know somebody else it wouldn't happen to you know people we know but there's no profile and I actually have girlfriends numerous girlfriends whose partners have like essentially fritted away thousands and thousands of dollars it's not uncommon it's really like it's heartbreaking but they'll say you know my partner lost ten thousand dollars or my partner you know actually spent eighty thousand dollars over three years like I have heard these conversations not from our

community from my friendship groups yeah absolutely me too in my work it's actually a question that I ask every single client um is there a history of problematic gambling I don't make them ask I say if there was this is what we would do and I think that having your debt dealt with in a BFA means that you can walk away you know ending a relationship is hard enough as it is and we also know that for women who take on that debt there's so much shame that they should have known better done better been smarter no it's not on you because you weren't educated not everybody has an army of lawyers when they get into a new relationship like you don't swipe right on tinder see their profile and also their debt levels like that's not how the world works but lucy we've even

had money diarists more recently who have said oh my partner had a gambling debt or a debt that they you know even just illegal style debts where they have taken out credit cards in their names or personal debts and they've been left in lurch with that and had to pay it off like this is the kind of thing that you could be protected from that's really important like these aren't little things that's right and i think also in this current economic climate where businesses are really suffering you know setting aside gambling debts this is a reality that is going to face many small business owners especially people with leases that are secured or um we just really want to make sure that all of that is dealt with in your bfa um you know that that there's certainty

that when you want to leave you can leave yeah and that is so important because we're not just talking about oh okay protect the asset you already have you might not have any assets and still really think that a bfa is something that is right for you correct yeah so obviously given you're on this episode, Lucy. We, as she's on the money, think it's really important to get proper advice around these things. And not every single person in a relationship needs to get a binding financial agreement, right? That's correct. So if we do feel like we need one, where do we go? How do we set one up? You said before we shouldn't just go on Google and get a bot to do it. So Lucy, what do we do? Absolutely. So, I have a stable of lawyers who I refer to. Not all family lawyers

do binding financial agreements. Not all of them believe that they are enforceable in majority of situations. And not all of them are able to deliver it in a cost-effective manner. So, a binding financial agreement is only, the output is only as good as the input. And so, it's not a matter of simply filling out an online questionnaire and your lawyer will draft it and so some lawyers really don't offer them because the time that it takes with a lawyer one-on-one to discuss the strategy what's appropriate your partner will need a lawyer so my recommendations to find a lawyer are facebook groups your local facebook group i always think word of mouth referrals are the best couldn't agree more i'm partial to a good

facebook group lucy true well yeah she's on the money is local to everyone so i might share my list of um there's a dozen family lawyers who you know comes up in estate planning all the time and i'm like this covers you in your death this does not cover you in your lifetime you need to do this as well and so i have a list of names of firms who oh my gosh yes we would adore that i'll put it on a social media post and we'll also add it to our website so that people can always access them Awesome. Well, that's a really good starting shortcut. I have pre-qualified them actually only last month. I was like, okay, who does them? I am going to highly recommend working with a lawyer. And if you are at the stage where you have an asset to protect, then I think that you're at

the stage where you just need to invest in this advice. I'm in a preventative area of law. Estate planning prevents fights. BFAs prevent fights. And I think that I just can't stand by the value any more than that. So talking about it being worth it, obviously, if you've bought a property and had that for a number of years before getting into a relationship, it's going to have been a really significant financial investment. So in my mind, that means that you probably should be spending a couple of thousand dollars to protect that asset like it's kind of like an insurance policy that you're taking out in a way on your relationship which seems a little bit morbid but we know the stats tell us Lucy that 50% of marriages actually end in divorce and while

that's not a nice thing to comprehend it kind of justifies why we are actually doing these things so how much will a binding financial agreement set us back? It is going to vary so much and I will say that when i created that list of qualified lawyers saying they did do it they all said um it it is an expensive area of law because it all depends on getting your actual facts um how you truly live values of things so i would say um between three thousand plus um and different firms will vary in price enormously and so you know it is worth taking that half a day off and to ring around maybe the whole dozen on the list and you will find someone in your price range and it will be worth it. And I don't know how you feel about this Lucy but I feel like when it comes

to having a lawyer yeah you can absolutely do remotely but it is actually quite important to have one in your state just because there are different rules and regulations. Well with family law I do not have any concerns referring people across the country so a lot of... Oh take that back my friends no yeah this area of law i think um has such a national focus wills uh it definitely state by state um but for binding financial agreements the principles are um national well that is why you are here and i'm not directing this conversation this time when a client comes to see me i always say that 90 of the work has already been done all we need you to do is um do your research, talk to a family lawyer, have that first consult, and they will coach you through how

to introduce this concept that you want to BFA to your partner. So literally, they'll be able to say in your exact circumstances, these are the top three reasons why your relationship is going to benefit from it. And so let the lawyer coach you in what to say. I literally say to people, do you want to practice talking about it when I'm trying to coach them through writing a will or something like that? I say, let's have that practice conversation and it really helps. It really, really does. And I think that helps in any circumstance when it comes to a sticky conversation or one that you're not super confident having. Role playing with a friend or a family member or your lawyer can be really, really effective. But talking about all of this

stuff makes it seem so much more common than it actually is. And according to a little bit of research I did before the podcast, in Australia, CanStar says that only 6% of couples actually have BFAs. Lucy, why is the percentage so low? I think that this speaks so beautifully to one of the things that I love about Australian culture so much, and that is that we are optimistic and we have a she'll be right attitude. So I love that in one sense. I think so too, because I also tried to do some research into how many Americans have prenups, because this is similar in a way to a prenup and the percentages did range too significantly for me to go okay cool this is what it was but it was significantly more than six percent. I think that the second part

would be that it is very true that binding financial agreements are commonly set aside by the courts so they are not bulletproof and again that goes back to they're only as good as the input and the lawyer that you use and they're not appropriate in every single circumstance but your lawyer will tell you that they'll say don't spend your money it's not worth it it's too late um at this situation the earlier you go and get advice and the earlier you put this in instead of waiting for the event that makes you go wow like the pennies dropped i need it um and then it might be that it's really difficult for the courts to agree that it was made um in good faith and without a little bit of pressure um so a really great example would be your mum or dad um has passed

away and we know that there's an inheritance coming of two million dollars and you go right now's the time i need a bfa of course your partner signed it they were under duress like but you know if you go and do it at the start of the relationship when we're not contemplating an exact circumstance it's just going to have more weight if you both went into it without that pressure um the very common one that just won't apply to your audience is uh when they're signed within a week or a couple of days before a marriage oh yeah but I think that that's really applicable at the end of the day because we might you know have a demographic of people who are going through that situation that go oh my gosh that's so true like that's you know what I did

or that's something that I was pressured to do in which case might not stand up in the way that you think it's going to yeah that's right and I think then the next important point is don't do them under pressure um you can do them at any point in your relationship so you know take your time go and get the independent legal advice um but i think that that statistic probably speaks to our nature um the uncertainty that that they might not hold up and also just that i feel like people need to shift their thinking about all of these investments and she's on the money does this so well. Oh, you are so kind. No, they're championing this advice as an investment. And, you know, we really need to start thinking about all of these things as just part and parcel of being

a homeowner or in a relationship. And they're just the cost of doing modern day life. I couldn't agree more. And Lucy, we're going to take a really short break. And then I'm going to ask you some questions about when BFAs don't work and ideas for you if you don't want one, don't go anywhere. All right, Lucy, we are back. And before you mentioned that you don't have to have any assets to have a BFA, but you might anticipate some things in the future. So it might be worth setting one up to make sure that you're not doing it under duress, which is very good advice. But if you don't have any assets and you don't think that there's anything coming in the future, does that mean that we probably don't need one? Well, and starting point is let's look

at the nature of your relationship and maybe you don't need one, but you want some certainty about what you're contributing to your partner's asset building, or if you're paying some of their mortgage, paying them rent, that might be why you want something. If you are not sure, if you're asking yourself this question, it means that you probably should get advice. Because if it's even a question in your mind, that to me is the trigger that you should talk to a lawyer. A lot of lawyers will give an initial consult for either free or very cheap, especially if you're not asking them to draft information. And what I think is invaluable that you're going to take out of that meeting is understanding the trigger point when you will need one. So all of those rumors

out there that are like, don't leave a toothbrush at someone's house and then you're not a de facto partner and oh my gosh is that true is that how we get out of it lucy no not at all so you're saying i could have actively left a toothbrush at steve's house much earlier than i did you should have yeah honestly i should have made my mark earlier than i did yeah so little yeah sayings like that they're just myths and um but what you will find out from your lawyer is the parts of them that are true and what does constitute a domestic relationship and it's going to apply to your assets and your BFA but it's also really handy to know for things like your super and although all these other areas of law but I just think if you went and spent 400 bucks on an hour with a lawyer if you're not sure

if you need one it's just going to be the best investment. I absolutely agree and $400 can seem like a lot to swallow but at the end of the day if you're at a point where you're like I don't know if I need a BFA when I'm moving in with this person or starting a relationship or whatever your situation might be. You don't need to get one, but if you're really questioning it, $400 is a very reasonable amount of money to spend to be told, don't worry about the $3,000 BFA. It's a very good amount of money to have a bit of peace of mind and get some advice that is going to be tailored to your personal situation. Because that lawyer is not just going to talk at you. They're going to ask a few personal questions understand what you do your partner does how it works and

they'll give you advice that's specific to you because unfortunately lucy we can't do all that on a podcast no that's right and it'll carry you through this relationship and future ones you'll know okay this is the timeline or this this these are the circumstances about sharing a home um you know it's um there is actually an amazing resource on a government website that i uh sent to my clients and it asks questions like if you live together if you have a cleaning roster that probably means you're not in a de facto relationship but if you share cleaning it means that you are in it when you plan holidays you know so there's um I'll share it for the group because I would love that I'll put the link for that in the show notes so that you guys can

all access it but I do feel like that could be really helpful I don't have a cleaning roster I have my cleaning schedule and that's just for me does that mean I'm in a de facto relationship lucy you're an independent woman independent woman all right moving on from that we've talked about it on the show before and we've talked about it just before you said that our lawyer might be able to equip us to have these awkward conversations and we said blame it on victoria and lucy if you want to bring it up but let's broach this how do we broach having these kind of conversations with our partners it's so awkward sometimes do you have some hot tips if we don't want to blame it on Lucy and Victoria or go directly to a lawyer? I think, I mean, for the people who are planning

to do this, I'm going to say that you are by nature responsible, you're planners. And I just think that if you broach it with your partner and they're surprised, I'm going to be surprised because, you know, your listeners are educated and savvy. And I think that that should surely be coming through in their relationships too. So I would hope so. Yeah. Yeah. So I think that number one, don't assume that your partner is going to think that this is coming from a bad place. They will probably already know you as someone who is a planner and responsible, and they'll just be like, oh yeah, that's just true to Victoria's style. Yeah. They're going to stereotype you straight to type A, my friend. They're going to see it a mile off. So don't

worry about it. They already know that about you. And it's probably one of the things that they love about you yeah it's cute that you thought that they wouldn't see this coming though hey yeah exactly they know you better than you think um and number two I think when people want to have a conversation or um and the other is avoiding it I say to them just ask them what's the harm like what's the harm in giving me half an hour and you know or what's the harm in listening to this podcast together what's the harm in us both having that free chat with a lawyer that free 15 or whatever they all do I think if you can hold their hand and get them from step a to step b and then step b to step c yeah and if it if it applies the lawyer will do the rest of the work

you've just got to introduce the topic and just don't be afraid it's your future that's at stake I agree and I think that the other thing I've said this on the podcast before but it's something that's seen me really well through awkward conversations whether it is with my friends my family my partner you know people that I work with I've always found that approaching things from an emotional perspective not crazy emotional but an emotional perspective instead of a accusatory perspective has really helped so saying hey Lucy you make me feel like xyz is much better than saying Lucy you always because it changes the tone of the conversation to hey this might not actually be reality. This is just my experience as opposed to just being straight

accusatory of it. So maybe saying things like, Hey, I feel like this is something we should consider. Not we need to consider this can be a really soft way of starting a conversation like that, that kind of promotes kindness and promotes a really soft and easy conversation. Because I think that one thing that we easily forget in conversations like this is you've been ruminating about it. You've been thinking about it. Maybe you've already spoken to a lawyer. So you're ready for this conversation. Your partner might not be privy to all of that. So this might be the very first time they're hearing about it. So you kind of need to tread gently and kindly because they might not be in the right mind space. It might not necessarily mean, oh my gosh,

they weren't receptive to it. It might just mean they need an hour or two to go, oh, okay, that's the conversation we're having today. I thought we were just going to talk about our grocery list or, oh, I thought we're going to talk about going to your mom's on Saturday. So I think it's really important to approach the conversation really kindly and softly, remembering that you're obviously more educated and more equipped to have that conversation in the moment. And it's actually okay if they're not ready. It doesn't necessarily mean they don't want to have it. They might not be surprised, but don't be offended if they're like, oh, what, what? I don't want to have this conversation right now because they just might not have the mental

capacity, which I think is very fair as well. Absolutely. I see it all the time in my estate planning practice. Nobody wants to do their will. No, thank you. And I know, I say that my clients have a six-month consideration phase. First of all, they identify that they have an issue and then they think about it and then they filter through all the different solutions they could have. And then they arrive at the time where they're ready to do something about it. Give your partner the respect of having their own consideration phase um and the strength of the document hinges on everybody doing it voluntarily so yeah couldn't agree more and lucy you and i know deeply that it's always an event that promotes people to do these things and that's

not necessarily the best time to do them either so speaking about making sure we're doing them voluntarily. And you said before that obviously if a BFA is done under fraud or duress, it's not actually going to stand to the test of time and the courts are maybe going to throw it out. Are there any other occasions where BFAs could be completely null and void? Absolutely. If you are not truthful with the assets that you own when you go into the BFA. So if you're hiding part of the picture, then the BFA, the context that was made in is just going to be irrelevant. So full and frank disclosure. It's also the best way to keep your lawyer's fees down. Just, you know, be forthcoming. Yeah, it makes things less complicated.

Correct. Yeah. We can get it right from the start as opposed to, you know. Pushing out and reiterating and changing and going, actually, we need an entirely new agreement. And I mean, I'd like to think that everybody has just little hidden emergency funds and apartments off to the side that they haven't told their partner about. But the reality of this is usually it's hidden debts isn't it Lucy? Correct yeah that's right so yeah if the information wasn't full and frank if there was any pressure to enter into it if you didn't get independent legal advice so if maybe your lawyer drafted it and they signed it without a lawyer explaining it to them that's going to be an issue. There are a lot of circumstances where it can be set aside if your lawyer hasn't drafted

it to comply with the legislation or if you've used a bot that you know missed some bits but the point that i want to make is that you are no worse off for trying and if it is thrown out what will happen is that you'll be in the family court and you'll be seeking a settlement that the court will approve and you're no worse off for having tried with a bfa first or maybe a part of it will be upheld you know maybe it will uphold it in terms of your parents inheritance but it won't stand up for the property that you built together um so yeah that would be the key takeaway that with the law unfortunately nothing is watertight but we we still think that you're better off for giving it a go um than not ah i feel like that's super interesting and actually really positive

because you're right it's better to just have tried than to have not tried at all so keeping all of this in mind if someone listening just is not convinced that a bfa is the way to go what advice would you give them lucy talk to your friends who have ended relationships about the reality of um how simple that was or how difficult that was do they wish they had one I think you know you can listen to to us but it is those personal stories that I know move people from indecision or a fixed no to a yes yeah and I say go and talk to so-and-so have you ever known anyone who has been divorced maybe it's an aunt maybe it's an older family friend and just say what was it like and you know they put um separation and divorce up there with the four

worst life events don't they up there they do they say it's one of the most traumatic events you can go through which i'm not i mean i'm trying not to be dramatic on this podcast but lucy i am always dramatic on this podcast and i mentioned this statistic before that 50 of marriages end in divorce you're saying that 50 of people who are married are gonna experience one of life's most significant traumatic events, like that just sounds really not good. Yeah, absolutely. I think that human need for certainty, we just can't get it when we're going through a separation. But if you have this element of your relationship taken care of, what happens to this debt, what happens to this asset, that certainty will just, you know, carry you through so, so much through a really

difficult time. Yeah. And I've said this before, again, on the podcast, because I'm just getting to a point where I'm a bit of a broken record, my friends. But one of the things that I really like about BFAs or, you know, setting yourself up from the very beginning or, you know, working out what would happen to your assets if you did divorce is that you're actually in a really special position at the beginning of your relationship. Like everybody's really excited about moving in together or maybe getting married, or you're maybe really excited about the new relationship. And at that point in time, you actually want the best for each other. Like I want the best for you, Lucy, and hopefully you want the best for me. And you do respect that

maybe I do want an inheritance protected or that house that I worked my entire life for before I met you. I want to protect that. And you're very likely to respect that in the moment because we're so in love and we want the best for each other. But if we were having that conversation when we're in the middle of a divorce and Lucy I cheated on you so you're a bit bitter at me you don't want the best for me at that point in time and we're having a conversation where you don't like the other person and therefore feel like maybe you're owed something or maybe you don't actually want them to have a better outcome so I really like the idea that we get to have this conversation about a binding financial agreement at the start of a relationship if possible or at

any point that you're actually in a really good mind space because it means that at the end of the day you can go you know what whatever happens happens we might not love each other anymore we might not want anything to do with each other but this agreement like I'm pretty happy with it because I wanted the best for you and you wanted the best for me and we were both really comfortable with it at the time and I think that for me that's a really nice part of the process where it's not actually like Lucy I want half of your stuff it's like hey we agreed to this like when we just wanted the best I say that all the time with estate planning as well I'm not asking you to do anything that I'm not also signing up to yeah exactly I can't control what your lawyer says

to you on the other half of a BFA matter and you know they might give you advice that says that you deserve more or that you know paying rent is actually contributing to the equity and I'm happy to roll that dice because we're just going to listen to the advice and take it as it comes and yeah I'm not asking you to do anything that I'm not doing too yeah and I think that that's you know a really important point because we're not recommending considering a BFA to put you in the best possible position it's actually to put your relationship in the best possible position which unfortunately some people just don't see it that way oh my goodness that is so interesting I honestly had no idea how many little bits and pieces there were to think about. I guess

binding financial agreements are something that aren't that commonly talked about, I want to say. They aren't. I mean, they are if you're in the She's on the Money community. We're all financially savvy people, but it's one of those things that we need to get nitty gritty on these topics. And Jess, I think my favorite learning from this was when Lucy said that actually, if you don't have a toothbrush at your partner's house, it doesn't mean you're not in a relationship with them which is a very common myth that people say oh if you don't put a toothbrush at their house you don't actually have a de facto relationship Lucy busted that one it is a myth which is kind of sad for all of you who maybe have been doing that but just did you put a

toothbrush at James's house early on or were you one of those people that just waited till you moved in together no I'm pretty sure I set up shop in his place very quickly I like my luxuries the three-in-one shampoo conditioner and body wash was really not going to cut it for me so I made sure I came prepared oh my gosh did you just take it to his house every time or did you literally just like all right cool popping this one in your shower um also I have a toothbrush here I've actually just cleared out one of your drawers it's mine now is that what happened definitely the latter one I just moved in and set up camp pretty much um but enough about that I will definitely make sure that we link that website in the show notes that sounds like it's going to be

really handy and worth checking out if you're interested in learning a little bit more because you know as we covered there's a lot to take into consideration when you're thinking about bfas and a huge thank you of course to lucy for sharing her expertise and her knowledge we'll also have her linked in the show notes as well of course and hopefully jess we can convince her to chime in more often on the podcast when we need a legal representative which i think would be really helpful so if you have any other suggestions or questions for lucy please shoot them through to our dms or comment on our instagram we are always watching and always open to questions that you guys might have but jess as always albeit you haven't featured a lot on this podcast i do have

to wrap it up here so as always just before we head off we'd like to acknowledge and pay respect to australia's aboriginal and torres strait islander peoples they're the traditional custodians of the lands the waterways and the skies all across australia we thank you for sharing and for caring for the land on which we are able to learn we pay our respects to elders past and present and we share our friendship and our kindness the advice shared on she's on the money is general in nature and does not consider your individual circumstances she's on the money exists purely for educational purposes and should not be relied upon to make an investment or a financial decision and we promise victoria divine is an authorized representative of australia pacific

Funds Management Pty Ltd, ABN 34132463257, AFSL 339151. And Lucy's a legit lawyer, guys. That wasn't fake news, like saying Jess is a lawyer, for example. See you next week, guys. Bye.