The Importance of a Financial-Relations Agreement

Over many years I have seen clients arrive at my office in moments of need, sitting across from a former partner - burned, because they hadn't agreed in advance and hadn't signed an agreement in time.

Most people avoid this step for a variety of reasons: "It feels uncomfortable", "Everything will be fine", "It will sort itself out", "We trust each other", "Our love doesn't need formalities". And in the end - it doesn't always sort itself out.

It's better to be safe than sorry.

So I've spent these years drafting agreements that protect lives - not from a place of pessimism, but from a place of taking proactive control.

Examples of why a financial-relations agreement matters

A financial-relations agreement organizes, in clear terms, the parties' finances, property, the division at separation, child custody arrangements - and more.

Spouses entering a second marriage, or those who bring substantial wealth or inherited assets to a relationship, often find themselves at divorce in a battle over property accumulated before the marriage - or assets that were personal to begin with.

Putting actual sharing of assets into clear writing - instead of relying on whatever the law might infer - allows us to draft a financial agreement that spells out the division, parenting structure, and complementary arrangements regarding wills and estate at separation.

The agreement is suitable for drafting both before marriage and at any phase of family life: when children from previous marriages are involved, and when the couple is about to acquire joint property.

The benefits

• In the event of separation (heaven forbid), there are no unnecessary legal battles, no excessive legal fees, no chaos.
• For second marriages with children from previous unions, the agreement protects the rights of the children and heirs.
• Beyond the obvious benefits, there are also tax advantages.

For instance: when one spouse owns an apartment in their name only and the couple now wishes to buy a second apartment together, the tax authorities may treat it as a "second apartment" purchase - triggering 8% purchase tax.

Where a financial-relations agreement explicitly establishes property separation for the apartment that was acquired before the agreement, the second spouse will not be required to pay the second-property tax - but only on the apartment acquired before the agreement. Significant tax savings.

Important to note

An agreement signed after marriage requires approval from a Family Court or Rabbinical Court, while a pre-marriage agreement (and any agreement signed before the wedding) only needs to be done in front of an attorney or notary.

A financial-relations agreement sets out arrangements during life - but does not determine division of assets in the event of death (heaven forbid). For that, a will is essential. We always recommend doing both: a financial agreement and a will.