The Family Law Act permits married and de facto couples (including same-sex couples) to enter into a Binding Financial Agreement which sets out how the property and financial resources of the couple is to be dealt with in the event of the breakdown of the marriage or relationship.
Financial Agreements are also known as;
- Binding Financial Agreement
- Cohabitation Agreement
- Prenuptial Agreement
When can I make a Financial Agreement?
You and your partner can enter into a Financial Agreement at three different stages, namely;
1. Before your marriage or the commencement of your relationship
2. During your marriage or relationship
3. After a divorce is obtained, or after the breakdown of a de facto relationship.
The way a financial agreement is worded will vary depending upon which stage of your relationship you are at.
What is a Financial Agreement?
A Binding Financial Agreement is a document that sets out what you and your partner have agreed to with respect to dividing your assets and liabilities, spousal maintenance and superannuation in the event of final separation.
Binding Financial Agreements do not have to be approved by the Family Court; rather it enables you and your partner to make decisions about the division of your assets in the event of separation without intervention from the Family Court.
Often these types of Agreements are useful when one of the parties has significantly more assets than the other, when the parties wish to clarify how specific assets will be dealt with on separation, or simply to provide peace of mind as to how matrimonial or relationship property will be dealt with.
Are all Financial Agreements binding?
Whilst a Financial Agreement is intended to prevent the Family Court from intervening with private arrangements made between yourself and your partner, the Court can make a declaration that a Financial Agreement is void if certain conditions are not met. These conditions are as follows;
- Each you and your partner must have obtained independent legal advice before signing the Agreement about the effect of the Agreement and about the advantages and disadvantages, at the time the legal advice was provided, to that party of making the Agreement;
- That prior to or after signing the Agreement, each party has been provided with a statement by their legal practitioner confirming that they have provided the advice to that party about the advantages and disadvantages of the Agreement;
- A copy of the statement by each party’s legal practitioner is given to the other party or their legal advisers;
- That the Agreement is signed by all parties and dated.
The Court may make an Order setting aside any Agreement where it is satisfied that the Agreement was obtained by fraud, duress, or in circumstances where full and frank disclosure was not made by any of the parties to the Financial Agreement about their financial circumstances.
Are Financial Agreements better than Consent Orders?
Upon the breakdown of a marriage or de facto relationship, in the event that you and your spouse can agree to the way your assets and liabilities are to be divided, it is possible to lodge an Application for Consent Orders to the Family Court for approval.
After final separation, an Application for Consent Orders will sometimes be the better option as the Application receives Court approval, and the Orders sought by the parties, if granted, are usually more difficult to set aside than a Financial Agreement.
However, Binding Financial Agreements provide the advantage to you and your spouse of being able to enter into an Agreement prior to or during your marriage or relationship.
You and your partner may also make the decision to enter into a BFA on final separation where the financial circumstances are complex, for example where the distribution of matrimonial or relationship assets involve company structures and involve consideration of taxation matters.