These financial agreements are sometimes referred to as ‘prenups’ or binding financial agreements. In fact, these agreements can be negotiated not only prior to a marriage, but during a marriage and after a separation. They are also available to be negotiated by defacto couples.
What is a financial agreement?
A financial agreement is an agreement that is not subject to the usual requirements of the Family Law Act (Cth) 1975 in relation to property settlement and in particular, the requirement that a settlement be ‘fair and equitable’.
Financial agreements are mostly done when parties are beginning a relationship and wish to protect existing assets or where parties wish to have certainty in relation to future events. They may be useful where there is a business, or children from a prior marriage, or one party has few assets and perhaps large debts.
A financial agreement will deal with what assets (and liabilities) are held by each party, and how they will be divided in the event the parties separate. These agreements can provide, for example, that particular assets will not be available for division in the event of separation – in other words, quarantining the asset.
Agreements can and will usually deal with the superannuation of the parties, and whether such superannuation will be protected.
These agreements can also provide for a party to receive spousal maintenance (or not) upon separation, and in what amount and for what duration.
Financial agreements require legal representation for both parties, as the legal representative must provide what is called a ‘solicitor’s certificate’ as part of the document. One solicitor may not act for both parties.
Financial Agreements and Separation
Occasionally, financial agreements may be recommended to formalise a property settlement. This will usually be when the agreement between the parties is not expected to conform to the requirements of the Family Law Act.
Are Agreements Binding?
If financial agreements adhere to the requirements under the Family Law Act (which are exacting), they will be binding and will stand against claims for a property division that would otherwise be available through the courts.
However, such agreements have been set aside by the courts for fraud, unconscionable conduct and undue influence – such arguments are usually centred on one party’s failure to completely disclose interests in assets or liabilities. Our lawyers can explain the strict requirements for a financial agreement to be binding. This case discusses where a BFA was NOT found to be binding.
NOTE – the above information is general-in-nature only and you should obtain advice suited to your particular circumstances.
Please call our office on (03) 9379 0877 to book a no-cost 30-minute consultation. We at Prompt Legal Services are here to answer your questions – in plain English – and give you guidance on ‘where to next’.