A Financial Agreement (or Binding Financial Agreement) sets out what a couple (either married or de facto) have agreed will happen with their property if they separate or in some cases, after they have separated.
Parties to a relationship, either married or de facto, can make an agreement which may prevent the Courts from becoming involved in property settlement after separation. Arrangements can also be made in this way for ongoing financial and spousal maintenance for one or both parties.
A Financial Agreement can be made before entering a de facto relationship (or marriage), during the relationship or after the relationship has ended.
Some people refer to these agreements as “prenups”, but this term doesn’t recognise the much broader circumstances in which these agreements can now be made.
It is important to understand that Financial Agreements are intended to prevent the Courts from interfering in the arrangements made for property division and financial maintenance in the event of separation (or following separation). Notably, the Financial Agreement does not have to be fair and reasonable and does not have to divide up property according to the normal principles of the family law.
You can make arrangements that suit your circumstances, provided the Financial Agreement complies with the strict requirements set out in the legislation. As family lawyers, we will advise on the fairness and appropriateness of the agreement for your personal circumstances both now and for the future.
There are many circumstances in which a Financial Agreement might be appropriate or beneficial. Some of the more obvious ones include:
To be binding and legally enforceable, parties to a Financial Agreement must have obtained independent legal advice (from a lawyer) and a certificate confirming this must be annexed to the agreement.
The lawyer must advise on the effect of the agreement on the rights of that party and about the advantages and disadvantages of making the agreement, at the time the advice was provided. The parties must engage their own lawyer to provide the advice; they cannot use the same lawyer.
These agreements are not approved or checked by the courts which means that it’s important for each party to have legal advice to ensure they understand how the agreement impacts them and whether it is fair.
A Financial Agreement can only be terminated in two ways, being:
A Financial Agreement can also be set aside by a Court if certain grounds are met. This type of application can be very expensive and there are no guarantees of success.
Financial Agreements can range from a simple agreement to a complex agreement depending on the asset structure and what the parties are trying to achieve. Each agreement must specifically reflect a couple’s unique circumstances and be drafted carefully to ensure compliance with the law. Your lawyer will give you an estimate/quote of costs in your matter, usually after your first appointment.