What is a Financial Agreement?
Financial agreements are contracts under the Australian Family Law Act in which parties to a marriage or de facto relationship enter into a legal agreement governing the financial arrangements should a marriage or relationship break down or end in divorce. Anecdotally, they may be referred to as “prenuptial agreements”, although under the Act they can be made before, during or after a marriage or de facto relationship.
Financial Agreements are very powerful documents as they oust the jurisdiction of the Family Courts to make orders regarding the division of assets on separation, unless the Financial Agreement is able to be set aside.
The ability to manage and determine how the assets and liabilities of the relationship are to be divided on separation can be incredibly important where one party has a higher earning capacity or brings a significantly greater value of assets into the relationship. A Financial Agreement can protect those initial assets or a large inheritance for the party responsible for the same.
A financial agreement can be a valuable tool to create peace of mind to know that you, and if applicable your children, will be taken care of in the event that you and your spouse decide to separate and go your own ways. Even if you do not have children, it can also be an excellent planning tool to ensure that, if the unfortunate and unexpected happens and a marriage or long-term relationship ends, then both parties are adequately protected.
The purpose of a Financial Agreement
The purpose of a Financial Agreement is to state how the assets, such as property and other financial resources, will be distributed after separation or divorce. Instead of going to Court, if parties can reach a mutual agreement between themselves, either by negotiation or by mediation, then they can record the terms of their settlement in a Financial Agreement. This can ultimately save you time, money and stress.
Financial Agreements can also deal with how much, if any, spousal maintenance is to be paid from one party to the other on separation.
Legal requirements for a Financial Agreement
In order for a Financial Agreement to be valid under Australian law, each of the parties to the Agreement must first have sought independent legal advice before the Agreement is formally executed. Both parties must then also sign the Agreement; a Financial Agreement would be invalid if signed by only one party.
The benefits of a Financial Agreement
There are numerous benefits to having a Financial Agreement, including:
- It can save considerable cost and stress on separation
- It prevents a Court from making orders regarding your property settlement
- It clarifies the initial contributions made by each party
- It can allow you to protect assets acquired prior to separation or anticipated inheritances
- It provides certainty to parties regarding their financial affairs
- It enables a quicker resolution following separation
- If you have already separated, they can be quicker to implement than Consent Orders and can provide finality regarding spousal maintenance in a way the Court cannot
We’re here to help
At Alex Mandry Legal Group, our experienced family lawyers can assist you by advising whether a Financial Agreement may be right for you and, if so, preparing and advising on the Agreement itself.
If you would like more information regarding property division either before, during or after your relationship has dissolved, contact our office on 1800 329 090. If you have a question, want further information or would like to speak to someone, make an enquiry now and we’ll be in touch with you very soon.