Financial agreements
Posted on February 15, 2023
A Financial Agreement is a document made under the Family Law Act 1975 that sets out how property is to be divided between a couple and how other related financial matters are to be dealt with if the couple separates in the future, or if they have already separated.
A Financial Agreement can be made before a de facto relationship or marriage commences (often referred to as a “pre nuptial” agreement); during a de facto relationship or marriage; or after a couple has separated or divorced.
Financial Agreements can include provisions for superannuation to be split between a couple; the payment of spousal maintenance to provide financial support to one of the parties; and the transfer of assets between the parties.
Assets transferred between parties after separation, pursuant to a Financial Agreement, can limit Stamp Duty that might otherwise be payable.
The purpose of making a Financial Agreement before or during a relationship, is to prevent the parties commencing Court proceedings if they do separate in the future. The terms of the Financial Agreement are followed, instead of the Court deciding what each of the parties will retain. The parties can avoid the financial and emotional cost of a dispute that could take many years to resolve.
It is a requirement that the parties to a Financial Agreement each receive independent legal advice before they sign a Financial Agreement. That means each party must have their own, separate lawyer. The lawyers must sign statements that they have provided the independent legal advice, and those statements are given to the parties.
Further, each party should provide complete disclosure of their financial circumstances, which allows for each party to receive appropriate legal advice and adequately consider the advantages and disadvantages of entering into the Financial Agreement.
A Financial Agreement cannot include enforceable provisions about the care or financial arrangements for your children. Other documents, such as a Parenting Plan, Consent Orders or a Binding Child Support Agreement can deal with those matters.
Once signed by the parties and their lawyers, the Financial Agreement is binding on the parties.
Parties can end the Financial Agreement only by making a Termination Agreement, or, if they want to make a new Financial Agreement, including a provision to terminate the original Financial Agreement in the new Financial Agreement. To be binding, the parties must also have received independent legal advice before signing the Termination Agreement.
A Financial Agreement can be set aside by the Courts in some circumstances, including if it is found the agreement was obtained by fraud (which includes a party failing to disclose a material matter); or a party to the agreement engaged in unconscionable conduct.
A Financial Agreement is a complex document that requires careful consideration and detailed legal advice. There are situations where a Financial Agreement may not be appropriate. As such, it is important to discuss what is suitable for you, with a lawyer who is experienced in Family Law.
