Hi SSers
I’m hoping some experienced legal brains might be able to help me out with an issue I’m having difficulty getting my head around. Obviously, you can’t beat professional tailored advice but I’m trying to get my understanding up as far as I can before I start paying for an adviser's time.
My partner and I are just at the beginning of our investment journey and, encouraged by family, have decided to get ourselves moving, make a plan and purchase an investment property. So that makes me a newbie investor and a FHB. I’m reading everything I can get my hands on, including most of Somersoft!
I guess my question comes down to structure and asset protection.
So far we have always lived 50/50 financially, splitting bills and keeping separate bank accounts, it works well for us. My partner has savings, enough for a small deposit, whereas I have only have personal debt but a larger income. It might take me another 2-3 yrs to clear my debt and save an equivalent amount so that we can start 50/50.
I want to move ahead now as time in the market is money, but I want to ensure that my partners deposit is protected i.e should the worst case scenario happen and our relationship breakdown and we decide to sell, that my partner gets their deposit back and the remainder is split 50/50.
We spoke to a broker, about the loan obviously, but mentioned this issue. He referred us to a solicitor and said that we needed a ‘partnership agreement’. The solicitor quoted a ballpark of $5000 to write a binding financial agreement (‘BFA’), which is a pre-nup. We have no issue with going down this route if it is the only way to protect ourselves, but that is a great big chunk of the savings and massively reduces our purchasing ability and so I’m trying to weigh up the alternatives.
My brain is going round in circles trying to weigh all this up
I know we aren’t the only couple in the world who like to keep separate finances and don’t align to the whole ‘we are one person’ paradigm. I’d love to hear how others have tackled these issues and successfully embarked on a joint venture.
Sorry for the long post
I’m hoping some experienced legal brains might be able to help me out with an issue I’m having difficulty getting my head around. Obviously, you can’t beat professional tailored advice but I’m trying to get my understanding up as far as I can before I start paying for an adviser's time.
My partner and I are just at the beginning of our investment journey and, encouraged by family, have decided to get ourselves moving, make a plan and purchase an investment property. So that makes me a newbie investor and a FHB. I’m reading everything I can get my hands on, including most of Somersoft!
I guess my question comes down to structure and asset protection.
So far we have always lived 50/50 financially, splitting bills and keeping separate bank accounts, it works well for us. My partner has savings, enough for a small deposit, whereas I have only have personal debt but a larger income. It might take me another 2-3 yrs to clear my debt and save an equivalent amount so that we can start 50/50.
I want to move ahead now as time in the market is money, but I want to ensure that my partners deposit is protected i.e should the worst case scenario happen and our relationship breakdown and we decide to sell, that my partner gets their deposit back and the remainder is split 50/50.
We spoke to a broker, about the loan obviously, but mentioned this issue. He referred us to a solicitor and said that we needed a ‘partnership agreement’. The solicitor quoted a ballpark of $5000 to write a binding financial agreement (‘BFA’), which is a pre-nup. We have no issue with going down this route if it is the only way to protect ourselves, but that is a great big chunk of the savings and massively reduces our purchasing ability and so I’m trying to weigh up the alternatives.
Do I stand a chance of being able to draft this agreement myself (I’m a law student so legal research into BFAs is not beyond me) and getting a solicitor to rubber stamp it for considerably less money?
Is the only way around this to purchase solely in my partners name and I save for a couple of years and we purchase a future property either jointly or in my name?
Are the difficulties of trying to allocate assets between us going to outweigh the up-front cost of the pre-nup in the long run?
As we’ve been living together for more than 2 yrs anyway we therefore have de-facto property rights over each other. Are we really gaining anything out of this? Is it fictitious to think of theirs and mine anyway?
My brain is going round in circles trying to weigh all this up
I know we aren’t the only couple in the world who like to keep separate finances and don’t align to the whole ‘we are one person’ paradigm. I’d love to hear how others have tackled these issues and successfully embarked on a joint venture.
Sorry for the long post