If you’re in the honeymoon phase of a new relationship or have been happily married for 30 years, you might be surprised to know that a financial agreement lawyer can help make you feel more secure and safe in your relationship. Despite general belief, financial agreements aren’t just for couples who are about to get married, in fact, can benefit any couple at any stage in their relationship.
What is a Financial Agreement?
A financial agreement, also known as a “binding financial agreement” or “prenuptial agreement,” is a legally binding agreement between parties that sets out how their financial assets and liabilities will be divided in the event of separation or divorce.
Who Can Get a Financial Agreement in Australia?
In Australia, financial agreements can be made by married couples, de facto couples, and same-sex couples. Married couples can enter into this type of agreement before they get married (prenuptial agreement), during their marriage, or after separation. De facto couples can also enter into a financial agreement before they start living together, during their relationship, or after separation.
Benefits of a Financial Agreement for All Parties Involved
In a financial agreement, both parties benefit in the following ways:
- Clarity and certainty: To provide clarity and certainty about how financial assets and liabilities will be divided in the event of separation or divorce. This can help avoid disputes and conflict, as well as reduce the time and expense involved in court proceedings.
- Protection of assets: To help protect assets that were acquired before the relationship or that were inherited or gifted during the relationship. It can also provide protection for business owners or those with high net worth.
- Flexibility: This agreement can be tailored to suit the specific needs and circumstances of the parties involved. For example, it can include provisions for spousal maintenance or child support, or address future financial scenarios such as inheritance or lottery winnings.
- Confidentiality: Unlike court proceedings, a financial agreement is a private arrangement between the parties and their lawyers. This can help maintain confidentiality and protect sensitive financial information.
- Cost-effective: Can be a cost-effective way to resolve financial matters in the event of separation or divorce, as it can help avoid costly and time-consuming court proceedings.
What Should be Included in a Financial Agreement?
While all financial agreements will look different as they should be tailored to suit the specific circumstances of the parties involved, you can generally expect them to address the following areas:
- Assets and liabilities: This can include real estate, investments and debts, bank accounts, superannuation and vehicles.
- Property settlement: How will property be divided between the parties? This should include the specific percentage of the asset pool each party will receive.
- Spousal maintenance: This is financial support paid by one party to the other after separation or divorce.
- Child support: If children are involved, there may need to be details for child support.
- Inheritance and gifts: The agreement may also include how any future inheritances or gifts will be treated.
- Dispute resolution: If disputes should arise, provisions like mediation or arbitration may be specified by the agreement.
- Legal advice: Importantly, the agreement must note that both parties have received independent legal advice. This includes each party’s lawyer signing a certificate confirming that this advice was given.
- Termination: How can the agreement be terminated if circumstances change, including if the parties reconcile?
How to Get Your Financial Agreement Organised?
If you’re interested in setting up a financial agreement, the process is fairly simple.
- Seek independent legal advice: It is a legal requirement that before any parties can enter into a financial agreement, both parties must obtain independent legal advice from separate lawyers. This helps to ensure that no one party is advantaged over the other. Therefore, the lawyers will review the agreement and provide advice on its legal implications and whether it is fair and reasonable.
- Draft the agreement: Once both parties have received legal advice, the lawyers will work together to draft the financial agreement using the information and preferences of both parties. The agreement must meet the requirements set out in the Family Law Act 1975.
- Sign the agreement: After the agreement has been drafted, both parties must sign the document in the presence of their respective lawyers. The lawyers will also sign the document and provide a statement confirming that they provided their respective parties with independent legal advice.
- Keep a copy of the agreement: Once you’ve signed the agreement, be sure to keep a copy somewhere safe, along with any other relevant financial documents. This makes it easier to check if the agreement is being honoured.
Can a Financial Agreement be Contested?
In Australia, they can be contested under certain circumstances. Additionally, there are several grounds on which a financial agreement can be set aside or declared invalid by the court:
- Non-compliance with legal requirements: The financial agreement must meet the legal requirements set out in the Family Law Act 1975. If it fails to comply with these requirements, it may be considered invalid and unenforceable. For instance, if it is found that one party did not receive independent legal advice when drafting and signing the agreement, the agreement would be deemed invalid.
- Undue influence or duress: If one party was forced or coerced into signing the financial agreement, or if they did not have the opportunity to obtain independent legal advice, the agreement may be set aside. Therefore, it is important you have a lawyer with your best interests in mind to avoid this situation.
- Fraud or misrepresentation: If one party was misled or deceived into signing the financial agreement, the court may declare it invalid. As with all legal matters, honesty is the best policy.
- Material change in circumstances: If there has been a significant change in the financial circumstances of one or both parties since the agreement was signed, the court may consider setting aside or varying the agreement.
Do You Need a Lawyer?
In Australia, both parties to a financial agreement are required to obtain independent legal advice from separate lawyers before the agreement can be considered legally binding. This is to ensure that both parties fully understand the terms of the agreement and the legal implications of entering into it.
The lawyers will review the agreement and provide advice on its legal validity, fairness, and enforceability. They will also ensure that the agreement meets the requirements set out in the Family Law Act 1975, such as being in writing, signed by both parties, and including a statement from each party’s lawyer confirming that they provided independent legal advice.
It’s important to note that failure to obtain independent legal advice can render a financial agreement unenforceable. This means that the agreement may not be legally binding, and parties may not be able to rely on it in the event of a dispute or separation.
Therefore, it’s highly recommended that both parties seek independent legal advice from qualified family lawyers before entering into a financial agreement in Australia. This will help ensure that the agreement is fair, reasonable, and legally binding, and that both parties fully understand the implications of the agreement.
How to Find Experienced Family Lawyers for Your Financial Agreement?
The process of drafting and finalising a financial agreement can be complicated and confusing, especially if you’re not overly familiar with legal processes. This is why it is so important that your lawyer is willing and able to take you through the process effectively. Furthermore, as much as your relationship with your partner might be wonderful, it is crucial that you have someone of legal authority in your corner. Your family lawyer should always have your best interests at heart.
When it comes to financial agreements, the lawyers at Duffy & Simon know what they’re doing. These seasoned professionals can assist you through your financial agreement with sensitivity, practicality and expertise. Reach out to Duffy & Simon today.