What to Know About Financial Agreements
A financial agreement is a binding contract between two parties (generally a couple), who have agreed in advance on how they would split their assets in the event of a relationship breakdown.
These agreements are helpful during a separation as they help to reduce the financial stress of a separation and allow the couple to separate & move on without the need for costly court action.
When Can You Enter into a Financial Agreement?
Marriage
You may enter into a financial agreement with your partner before the marriage, during the marriage or after the marriage (depending on which relates to your circumstances, a different part of the Act is applicable to your agreement.)
De facto Relationship
You may enter into a financial agreement with your partner before the defacto relationship, during the defacto relationship or after the defacto relationship (depending on which relates to your circumstances, a different part of the Act is applicable to your agreement.)
What does a Financial Agreement Generally Cover?
Financial agreements cover a multitude of a couples personal & financial affairs, including but not limited to:
- Individual incomes.
- Current assets & assets considered as shared.
- How many & what future assets will be managed.
- Who will obtain custody of the family pets.
- How will future children affect the agreement.
- Spousal maintenance.
- In case of a de facto relationship – how will marriage affect the agreement.
What Are the Benefits of Having a Financial Agreement?
There are many benefits of entering into a financial agreement, these benefits include:
- It provides certainty and peace of mind that your assets/inheritance etc. acquired during the relationship are protected in case of separation.
- Avoids costly litigation process over assets acquired in the relationship in the event of a separation.
- It’s binding on a person’s estate in the event of a person’s death.
Reasons Why a Financial Agreement Can Be Overturned?
The Agreement Was Obtained by Fraud
A false representation has been made knowingly, without belief in its truth; or recklessly or carelessly as to whether it be true or false. The fraud may relate to matters within the financial agreement itself.
The Agreement Is Void, Voidable or Unenforceable
A financial agreement may be void due to mistakes, uncertainty, or incompleteness.
Circumstances Have Arisen Since the Financial Agreement Was Signed That Has Made It Impracticable for The Agreement or Part of The Agreement to Be Carried Out
After a financial agreement is signed, if an intervening event occurs, even if not caused by the fault or conduct of either party, or the terms of a financial agreement cannot be performed, then a Court might order that a financial agreement be set aside.
Since The Making of The Financial Agreement, A Material Change In Circumstances Has Occurred
As result of the change, a party will suffer hardship if the Court does not set the Agreement aside.
A Party to The Agreement Engaged in Conduct That Constituted Duress, Undue Influence Or Unconscionable Conduct
Duress may be found to have occurred where the use of illegitimate pressure by one party has induced the other to enter into the Agreement. The effect of duress is to inhibit the will of the weaker party, i.e., it impacts on their capacity to give consent.
Undue influence may be found to have occurred where there is the use of influence by one party over another for the benefit of the dominant party or a third party.
Unconscionable conduct may be found to have occurred where one party is under a special disability that renders them unequal to the other party, and that disability is so evident to the stronger party, it is unconscionable for the Agreement to be made.
Special disability can include an array of different factors. To prove unconscionable conduct, it’s necessary to consider the conduct of the stronger party in dealing with a person under a special disability, in circumstances where it would be inequitable that the conduct would be allowed to affect the outcome of the bargaining process.
Inadequate Legal Advice
The independent legal advice requirement causes significant issues as it requires you to try to predict whether independent legal advice will be proper & sufficient as such that the Agreement is not open to being set aside on the account of the other sides solicitor’s negligence.
The Concept of Fairness and Reasonableness
While there is no specific requirement of fairness or reasonableness in the Act, case law identifies that unless an agreement is fair and reasonable it will be vulnerable to challenge.
In essence, one-sided agreements may look good on paper but are difficult to uphold in Court when challenged. Further, generally there is nothing to lose for an applicant in challenging such financial agreements.
If you require assistance with a financial agreement, contact our family team today.
Our Family Law Blogs and Podcasts
Parenting Orders are legally binding court orders that determine the rights and responsibilities of parents in relation to their children. These orders outline important aspects such as where the child will live, who they will spend time with, and how major decisions regarding their welfare will be made. These orders set out the arrangements for… Read More »Parenting Orders
If you’re going through a separation or divorce, sorting out your financial affairs is often one of the biggest challenges. You want to make sure that everything is settled fairly and legally, providing security for both parties involved. One common way to achieve this is through a binding financial agreement or a consent order. But… Read More »Binding Financial Agreement vs Consent Orders
When dealing with a property settlement one of the first things your lawyer will ask you to do is compile your financial disclosure. So, what is it, and why is it important? The most obvious answer is your financial disclosure is everything related to your current financial position. Think bank statements, tax returns and payslips.… Read More »Understanding Financial Disclosure
The Benefits of Mediation When conflicts arise in a relationship breakdown, they can be timely, pricey, and stressful. Alternative Dispute Resolution processes such as mediation can assist you to reach an agreement without having to resort to going to Court for property or parenting-related matters. What is Mediation? Mediation in its fundamental nature, is a… Read More »The Benefits of Mediation
What is a Binding Financial Agreement? A Binding Financial Agreement (a ‘BFA’ for short), is a legal document that outlines the financial arrangements between two parties in the event of a relationship breakdown. This agreement can be entered into before, during, or after a marriage, de facto relationship, or civil partnership. It provides clarity and… Read More »Binding Financial Agreement
What Are Consent Orders? Consent orders are an essential aspect of the legal landscape, particularly in family law matters. They provide a mutually agreed upon solution between parties involved, without the need for prolonged court battles. The Role of Consent Orders in Family Law Consent orders play a vital role in family law matters as… Read More »Consent Orders
Going Through a Separation or Divorce? Going through a divorce or separation can be can a stressful and confusing time. You may find that everyone seems to have a horror story to tell or advice to give making it difficult to sort fact from fiction. No two separations are the same so it’s important to… Read More »Things to Know Prior to Separation
If you have recently separated or contemplating separation and there are children involved, then you’ve likely come across the term parental responsibility. In this podcast, PD Law Senior Associate and Family Lawyer, Elizabeth Smith, discusses what you need to know about parental responsibility in Australian Family Law.
The break-up of a marriage or de facto relationship is naturally one of the most stressful times in a person’s life. Apart from dealing with the emotional toll of the split and, in many cases, its effect on children from the relationship, the process of disentangling two lives in terms of property and assets can… Read More »How Do We Get to a Just and Equitable Division of Assets in a Family Law Property Settlement?
Suits and other law TV shows make going to court look so quick and easy. Makes for great TV but the reality is starkly different. Court can be brutal, drawn out and expensive – family law litigation particularly so. You don’t need to go to court to end your relationship or get the outcome you need.… Read More »Netflix has a lot to answer for………
We focus on: Cutting down on expense & emotional cost The resolution & not the battle Where possible, we prefer to stay out of Court, cutting down the expense and emotional cost, but when it’s necessary we can prepare urgent applications to the Court to protect your children or preserve your property rights. Reasons to… Read More »What Do You Want From Your Family Lawyer?
Separating? What Now? Going through a divorce or separation can be can a stressful and confusing time. You may find that everyone seems to have a horror story to tell or advice to give making it difficult to sort fact from fiction. No two separations are the same so it’s important to get the right… Read More »Things to do when you are separating from a partner
Ending a relationship can be stressful and it’s easy to get confused trying to work out what you need to do to protect yourself and your assets at such an emotional time in your life. To help offer some guidance, here’s some tips on things you should do, or consider, when you separate from your… Read More »Family Law – Going through a separation – what now?
When a relationship breaks down – who gets the kids? As we come into the last few months of the year, family issues are heightened with financial pressure from having to buy the kids Christmas gifts, to sorting childcare arrangements over the holidays. At certain times this can lead to couples separating and possibly a… Read More »Family Law Seminar Series – 2
Separating? What happens now? PD Law are running a series of FREE Family Law Seminars in conjunction with the Whitsunday Neighbourhood Centre. The first of these will take place on Wednesday 7 September from 5.30pm to 7.30pm at the Whitsunday Neighbourhood Centre. There is always a “grey” area when a couple first separates. When you… Read More »Family Law Seminar Series
BINDING FINANCIAL AGREEMENTS (BFA) The beginning of a relationship is always an exciting time and in that moment it can be hard to imagine the possibility that things might not work out as planned. Unfortunately, with the realities of modern life, relationships do not always work out and often couples are left trying to deal… Read More »Before, during or after a relationship – any time is the right time to make a financial agreement