In the previous article in this series we discussed the often poorly understood financial agreement (often called a binding financial agreement or pre-nuptial) within family law matters and covered some background and why you might consider a financial agreement at the start of a relationship.
In part 2 of this series we discuss what matters a financial agreement can cover and how it can help avoid costly court appearances.
What can a financial agreement cover?
The Family Law Act provides for parties to a marriage or de facto relationship to make a financial agreement before, during or after the relationship in relation to:
- Financial settlement. This covers the way in which assets including real estate, personal property items, bank accounts, shares and superannuation entitlements will be distributed between the parties to the relationship.
- Financial support. This covers how one party to the relationship will support the other after the relationship has ended. In common language, most people refer to this as “maintenance”.
- Any incidental issues. This is a catch all for other matters that may be important to the parties but are not strictly about financial settlements or support.
It’s important to note that financial agreements, as you would expect, can not provide for care arrangements relating to children.
Financial agreements and the Court
Many people incorrectly assume that the breakdown of a relationship will inevitably result in a court appearance or some court determined arrangement between the parties.
One of the most important reasons to consider a financial agreement, both before or after a relationship, is to reduce the likelihood that a court appearance or court decision is required.
A financial agreement acts to avoid involving the court in determining how assets and support will be dealt with by reaching agreement between the parties involved.
However, a simple verbal agreement or a “handshake” between the parties is not enough to make the agreement binding. The agreement must comply with the Family Law Act by:
- Being signed by all parties
- Each party has received independent legal advice about the effect of the agreement and about the advantages and disadvantages of the agreement
- Each party has a statement from their lawyer confirming they have received independent advice and that statement must be given to each party or their lawyer
In most circumstances this will result in an agreement that suits the interests of all parties involved and significantly reduces the cost in time, money and emotions that a court appearance can produce.
If you have any questions about financial agreements for yourself or in relation to a client you are advising, please contact a member of our family law team for more information.
Next week in Part 3 of this series we will discuss when a financial agreement can be set aside or terminated.