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Author: Anne-Marie Murphy
Publish Date: Thursday, July 26, 2007
Financial agreements: Dealing with property and financial matters under family law
Taking control of your finances and property is a difficult and complex task, especially when it involves the rights and interests of two parties in a marital breakdown. Drafting a financial agreement has the potential to empower couples to protect their assets and achieve a more tailored divorce settlement.
What is a financial agreement?
A financial agreement is a written agreement that deals with the finances, property and maintenance of parties in a marital relationship. Financial agreements are made pursuant to theFamily Law Amendment Act 2000 (Cth) (the Act), which was passed on 27 November 2000. Part VIIA of the Act provides that financial agreements can be made before, during or after marriage.
Parties to a de facto relationship can also enter into these agreements, although they are called “cohabitation agreements” and are regulated by the De Facto Relationships Act.
Binding financial agreements and the Family Court
Generally speaking, to be binding the financial agreement must:
- be in writing;
- specify under which section of the Act it is made;
- be signed by both parties;
- specify both parties have received legal advice on certain matters;
- specify both parties have been advised of the financial implications of the agreement;
- not have been terminated or set aside by a court; and
- upon signing the original be given to one party and a copy to the other.
Similar requirements and formalities apply to de facto couples entering a “cohabitation agreement.”
If these requirements are not met, the agreement will not be a binding financial agreement. However, it could still be a “contract” to be considered by the Family Court when deciding property and financial matters.
Before the amendments of November 2000, financial agreements were not as legally binding or enforceable between parties. Agreements reached prior to marriage, during or after marriage, were considered simply relevant factors by the Family Court when reaching a decision
However since these amendments, the Family Court has little intervention with financial agreements. There is no need for Family Court approval or registration. The Family Court also does not decide matters with respect to financial agreements, provided they are well drafted and comply with the requirements set out in Part VIIA of the Family Law Act.
Expert legal advice is essential because of the binding nature of the agreement and limited intervention by the Court. Our family law specialist will help you draft your agreement to:
- best protect your assets in the event of a relationship breakdown – including inheritance;
- ensure it complies with formal requirements set out in the Act;
- provide certainty;
- protect ownership and retention of any business/commercial interests;
- prevent potentially costly and time-consuming litigation; and
- provide peace of mind when looking after your assets in the event of a marriage breakdown.
If you don’t seek specialist advice, you risk having the Family Court setting aside the financial agreement. The Family Court can set aside the agreement if:
- it is obtained by fraud or void;
- it is impracticable to carry out the agreement or any part of it;
- a material change in circumstances; or
- one party has engaged in unconscionable conduct.
Financial agreements made before marriage
Financial agreements may be entered when a couple is contemplating entering into the marriage.
If you and your partner are considering getting married, speak to our family lawyer at Bell Lawyers. Our Family Lawyer will explain how to draft a financial agreement to outline factors such as:
- how the property or financial resources of either or both parties will be divided in the event of the dissolution of the marriage;
- the maintenance of the parties during and/or after the dissolution of the marriage;
- what should occur should the marriage not take place.
Financial agreements made during marriage
Financial agreements made during marriage are generally relied upon to resolve spousal maintenance issues when the marriage breaks down. Legal advice is paramount when drafting such as agreement, because if it is signed prior to the divorce, it is likely that neither party may seek maintenance from the other in the future.
Financial agreements made after marriage breakdown
Parties may enter into a financial agreement if they have been granted an order to dissolve the marriage. Generally speaking, these agreements give the same ability to the couples to finalise matters relating to property and finances as those agreement made prior or during marriage. The major difference however, is that an agreement made after the marriage breakdown will not have the same effect with respect to spousal maintenance as those made before or during marriage. Consequently, if you and your partner wish to end your relationship, it is prudent to seek the advice of a lawyer before you are granted a divorce.
Can I terminate my financial agreement?
The two main ways of ending a financial agreement are:
- entering a new binding financial agreement that specifically outlines the end if the previous agreement; and
- entering into a termination agreement pursuant to s 90G of the Act.
Before entering into a termination agreement, seek legal advice to ensure your rights and interests to your property and financial resources are not jeopardised.
The importance of seeking independent, timely advice
If you and your partner are interested in drafting a financial agreement, it is prudent to seek legal advice independently from your partner. At Bells Lawyers, we will be able to draft an agreement that is tailored to your needs, and refer your partner to an appropriate legal representative who can advise them according to their individual needs. So make an appointment with us today so that we can help you reach a financial agreement for a more secure and confident future.