Family and Defacto Relationship Law
Wills & Estates
Financial Agreements (commonly called Binding Financial Agreements) are legal contracts made under the Family Law Act 1975 to deal with financial matters between the individuals who sign them. A Financial Agreement can be entered into before or during a marriage, or after divorce, as well as before or during a de facto relationship (including same sex relationships), or after a de facto relationship has broken down. The main focus of most Financial Agreements is the division of assets and liabilities in the event that the marriage or relationship ends, and the payment of spouse maintenance (financial support) by one spouse/partner to the other following separation.
Agreements signed before marriage or before a de facto relationship begins (commonly called Pre-Nup Agreements) are suitable for those individuals who wish to agree in advance how their financial affairs will be determined if their marriage or relationship breaks down. This type of asset protection strategy provides some certainty and can serve to avoid arguments and expensive litigation when a marriage/relationship sours and the parties separate. Pre-Nup Agreements tend to be used in the following situations:
At the end of a marriage or de facto relationship, in the absence of an existing Financial Agreement, the parties will usually endeavour to negotiate a settlement by relying upon all relevant provisions in the Family Law Act. If negotiations are successful, usually the agreement will be recorded by means of Consent Orders made by the Family Court of Australia. However, sometimes people prefer to record their agreement by way of a Financial Agreement.
It is a requirement of the law that both parties to a proposed Financial Agreement obtain independent legal advice from separate lawyers. This ensures that both parties have the benefit of legal advice before they give up significant legal rights by signing an Agreement. Financial Agreements are usually designed to override some important provisions of the Family Law Act which deal with property settlements and spouse maintenance, and to remove the usual powers of the courts which handle financial disputes. Because of this, there is a heavy onus placed upon lawyers who represent clients in the preparation and execution of Financial Agreements to ensure their clients fully understand the outcome of their decision to deal with their legal matter this way. Most lawyers will insist upon giving their clients comprehensive written advice.
Some Financial Agreements are used to “plan ahead” at the start of a new relationship or marriage, while others are used to formalise negotiated financial settlements at the end of a de facto relationship or marriage. Regardless of the purpose, the law and processes surrounding these Agreements are complex; many issues need to be considered and carefully factored into the negotiations which take place during the preparation of an Agreement. This will ensure that the Agreement is tailored to your specific needs. Also, because a Financial Agreement is a legal contract, contract law principles apply and these can have a bearing on the enforceability of an Agreement. It is therefore imperative that you work with an experienced family law solicitor if you are considering a Financial Agreement, particularly one who is skilled in dealing with such Agreements. A failure to meet all of the strict legal requirements for a Financial Agreement could lead to an Agreement being set aside by the court and, therefore, not serving its intended purpose.
Lindsay Woods, a Queensland Law Society Accredited Specialist in Family Law, has many years’ experience in preparing, critiquing and advising upon Financial Agreements. You will benefit from his expertise. He will tailor your Financial Agreement to suit your individual circumstances. Call our office now to make an appointment with Lindsay, or submit your enquiry online now.