What are Financial Agreements?
Pre-nuptial Agreements, Cohabitation Agreements and Binding Financial Arrangements are more accurately (in a legal sense) known as Financial Agreements.
A Financial Agreement is a contract between a couple as to how assets and resources will be divided should they separate. It can be made before, during or after a de facto relationship or a marriage. It is important to note there are some specific requirements for de facto and same sex couples in Western Australia.
Financial Agreements may be simple or complex according to the financial matters they address. They are often entered into as part of an overall succession plan prepared in conjunction with Wills and Enduring Powers of Attorney, to ensure that parties' interests are protected in the event of separation and or death.
Who might consider making a Financial Agreement?
Anyone who:
- Brings substantial assets into a relationship or marriage
- Is contemplating remarrying or starting a de facto relationship
- Is likely to receive a substantial inheritance
- Has a particular asset they want to protect
- Wants certainty of outcome if their relationship or marriage breaks down
- Has children they want to provide for in the event of a relationship breakdown.
What can a Financial Agreement cover?
As well as how property, assets and financial resources are to be divided, a Financial Agreement can also cover ongoing spousal maintenance, and other matters.
What doesn't a Financial Agreement cover?
Financial Agreements can't properly address arrangements for children.
What is the effect of a Financial Agreement?
Provided the various requirements in the law are met, a Financial Agreement is an enforceable legal contract. Where a Financial Agreement is in place, the financial matters it deals with cannot be the subject of court proceedings for property settlement or spousal maintenance.
Can a Financial Agreement be set aside?
There are various circumstances where a Financial Agreement may be set aside including:
- Fraud (including material non-disclosure)
- Duress (i.e. being forced to do something)
- Unconscionable conduct (behaving outrageously or unreasonably)
- A change of circumstances relating to a child of the relationship.
What protections are there?
There is a requirement before signing the Agreement that each party obtain independent legal advice as to the meaning and effect of the Agreement, and the advantages and disadvantages of entering into the Agreement. Often, the lawyer providing the independent advice will also suggest that the parties obtain expert financial advice from a person such as an accountant or financial advisor.
How can a Financial Agreement be ended?
A Financial Agreement can specify that the Agreement will only have effect for a limited period of time and then the Court will have jurisdiction to deal with the parties' assets and support. Alternatively, the parties can enter into a Termination Agreement (which will also require both parties to have independent legal advice). The Family Court can also set aside Financial Agreements or declare them to be non-binding (as referred to above).