Financial Agreements Gold Coast

 A Financial Agreement (commonly referred to as a “binding financial agreement”) is a private contract between two parties made under the Family Law Act 1975 (Cth) (“the Family Law Act”) that sets out how the parties intend to divide their property and financial resources if their relationship comes to an end.

Parties may also enter into a Financial Agreement after separation, as an alternative to Consent Orders.

If a Financial Agreement is binding, it ousts the jurisdiction of the courts that have jurisdiction under the Family Law Act to make orders about property, maintenance, or both.

A Financial Agreement may cover all aspects of the parties’ financial relationship with one another, such as real property, all assets, superannuation, and liabilities, or it can be limited to specific issues, for example, spousal or de facto maintenance.

When can I enter into a Financial Agreement?

The Family Law Act provides that Financial Agreements can be entered into by parties in the following circumstances:

Married couples

  • Before marriage (often referred to as a “pre-nup”)
  • During marriage but before separation
  • During marriage but after separation
  • After divorce

De facto couples

  • Before a de facto relationship commences
  • During a de facto relationship
  • After a de facto relationship ends

Financial Agreements and Asset Protection

Financial Agreements made before or during a marriage or de facto relationship may form part of an asset protection strategy.

Couples may decide to enter into a Financial Agreement to create a degree of certainty about how their property, assets, superannuation, and liabilities will be divided in the future, should their relationship with one another ultimately break down.

Financial Agreements can provide for specific asset protection, such as inheritances, gifts, and generational family wealth.

Financial Agreements may provide added assurance for parties who have already experienced the distress of family law financial litigation, and do not wish to relive that experience with their new partner.

Financial Agreements can also be used to formalise an agreement between parties about spousal and de facto maintenance. Maintenance is financial support paid by one party to a marriage or de facto relationship to the other party, in circumstances where the receiving party is unable to adequately support themselves.

A Financial Agreement is the only way that parties may oust the Court’s power to make an order about spousal or de facto maintenance.

Just how “binding” are Financial Agreements?

When prepared and executed correctly, a Financial Agreement removes the Court’s jurisdiction to deal with the parties’ financial matters pursuant to the Family Law Act. A Financial Agreement is a private contract between the parties, which is not considered by the Court and is not subject to the Court’s requirement that the proposed outcome be “just and equitable” for each party.

Notwithstanding this, the technical requirements for a valid Financial Agreement are set out in detail in the Family Law Act. The Financial Agreement must strictly comply with these requirements for it to be considered “binding”.

Each party proposing to enter into a Financial Agreement must obtain independent legal advice from a qualified legal practitioner, before signing the agreement. This advice must be provided to each party in writing and must set out the advantages and disadvantages of the Financial Agreement, as at the time the agreement is entered into.

Each party must be provided with a signed statement by the legal practitioner stating that the requisite advice was provided to that party.

Although Financial Agreements are intended to prevent the Court’s involvement in the matters covered by the agreement, the Court nonetheless has the power to set aside a Financial Agreement in a number of circumstances, for example, if the agreement was entered into for the purpose of fraud, or for the purpose of defeating the interests of other parties/creditors.

Importantly, if a “material change” in circumstances occurs since the Financial Agreement was made, such that a child or party to the agreement will suffer hardship if the Court does not set the agreement aside, the Court may set aside part or all of the Financial Agreement.

It is important to be aware that Financial Agreements, particularly those entered into before or during relationships, should not be considered a “set and forget” document, to be placed in the bottom drawer. As parties’ circumstances change, it may be critical for Financial Agreements to be varied and updated, to ensure the binding nature of the agreement is preserved.

Is a Financial Agreement a good option for you?

Financial Agreements are a complex area of Family Law.  We would be pleased to assist you in determining if a Financial Agreement is right for you.

For advice specific to your personal circumstances, we invite you to contact our Family Law team at ABKJ Lawyers.

Call (07) 5532 3199 or enquire online.