Binding Financial Agreements may be entered into by a married couple before marriage, during marriage or after divorce. Similarly, a de facto couple may enter into an agreement before commencing, during or after a de facto relationship.
In the event of a relationship breakdown, there are often complicated disputes that arise from dividing assets owned by the parties. You may have heard of a “pre-nuptial” agreement or what we would refer to as a binding financial agreement. These are agreements which allow parties to contract out of the provisions of the Family Law Act 1975 that would otherwise determine the division of the couple’s asset pool if the relationship breaks down.
If you are considering entering into a binding financial agreement, it is important you seek independent legal advice.
What are the Advantages to a Binding Financial Agreement?
A binding financial agreement allows the parties to stipulate in writing what they consider to be a fair distribution of their assets and financial resources. Drafting a binding financial agreement when the relationship is amicable generally leads to an agreement which is fair and reasonable and can provide certainty and control of their financial affairs. The agreement also clarifies each parties’ contributions and value of assets which they bring to the relationship and can ensure family assets are inherited to a party’s children.
Requirements of a Binding Financial Agreement
In order for the agreement to be binding, the formalities contained in the Family Law Act 1975 must be complied with. This requires:
- The agreement to be made in writing and signed by all parties.
- Specification of which Act and section the agreement is made under.
- Certificates from each party to confirm they have received independent legal advice.
- Full and complete disclosure of financial circumstances before entering into an agreement.
- Notification be given to third parties affected by the agreement
- The agreement to deal with property, financial resources and/or spousal maintenance of parties or matters incidentally.
- A Separation Declaration if the parties are married but not divorced and intend on enforcing the agreement.
A binding financial agreement will also not be binding where it has been terminated by a later agreement or there is an element of fraud or unconscionable conduct in the process of developing the financial agreement.
What can we do to help?
We are experienced in dealing with complex asset protection strategies and the associated tax and property implications to safeguard your financial future. Our team provides expert legal advice and assistance drafting, reviewing and optimising your binding financial agreement. We can ensure your agreement complies with the legal requirements under the Family Law Act and is drafted in a way that adequately provides for each party upon separation, which the court would be less likely to set aside.