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When It Comes to Separation, Why You Should Always Formalise Your Financial Thoughts

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While money can certainly make the world go round, it can also bring things to a shuddering halt in the event of an acrimonious separation. It's crucial, therefore, for both parties to understand the implications and to make some kind of agreement between them going forward. How should they approach this to avoid any nasty issues in the future?

Asset Distribution

In many relationships, one party may have a sizeable estate whereas the other may not. Following a separation, both individuals may stake a claim to some of their combined assets, but if they were to formalise a divorce, then such a claim would typically end at that point.

Risky Times

Some couples choose to separate but may not apply for a divorce. They may come to a verbal agreement between them when they go their separate ways, but may not take any solid steps to protect their assets in the future. This can be very shortsighted, and one individual may apply to a court at some point in the future to claim some of the other party's assets. It's far from unusual and can result in a sizeable loss for the person with the bigger estate.

There are two ways to avoid this type of situation.

Consent Orders

To begin with, you could apply to a Family Law Court with consent orders. These documents describe an agreement between you in terms of asset distribution and future needs. The court will consider this, and if they see it as fair, will make those consent orders binding.

Financial Agreement

The better way out, in many respects, is to create a financial agreement or a contract between you. This document will be detailed and set out the financial arrangements in very clear terms. It will typically include a clause that forbids a party from seeking further access to funds through a court. If such an agreement is in place and is valid, the court may reject any approach in years to come.

Creating the Agreement

If you want to get a financial agreement written up, you will need to get it prepared by a family lawyer. Both parties will need to take legal advice before they sign it and be very clear about what they are doing.

Getting Advice

If you're unsure how to proceed, ask for advice from your lawyer. They'll outline the options and remind you that in a case like this, formal is better than informal.

To get help with this and other family law issues, talk to an attorney in your area.