Financial agreements can be classified into three categories:

1. Binding Financial Agreement (commonly referred to as a pre-nuptial agreement (entered into before or during the relationship) – s 90B,

2. Binding Financial Agreement during marriage – s 90C and

3. Binding Financial Agreement after divorce – s 90D.

If you have to an agreement without obtaining independent legal advice, remember that you should find out what your legal entitlements are before you sign anything.

Gaining knowledge on your legal entitlements will help you to make an informed decision before you enter into a binding agreement.

A qualified lawyer can draft the agreement for you. This will ensure that the agreement covers all legal issues, particular those you may not be aware of. A properly drafted agreement will help to ensure the agreement is binding.

A Binding Financial Agreement has certain requirements which must be fulfilled in order for the agreement to be binding. It is also important to be able to demonstrate each party fully understands and accepts the agreement.

To be valid and enforceable a Binding Financial Agreement must be in writing, signed by both parties and each party must obtain independent legal advice. The lawyers advising each party must sign a statement that they have given independent advice.

Financial Agreements can regulate financial arrangements between married couples, de facto couples and same sex couples.

A financial agreement provides the couple with the knowledge that if they separate, the division of their property has already been arranged. The best advantage is obtained from a well drafted financial agreement which has been prepared after proper consideration on the part of the parties to the agreement

There is still some uncertainty about how the law providing for financial agreements will be applied. The situations where a financial agreement will be set aside are not yet clear. Where inadequate consideration is applied by the parties then unanticipated circumstances may arise which make the agreement unfair.

Common reasons for considering a prenuptial agreement include:

• ownership of a successful business;
• having a high level of wealth;
• having children from a previous marriage;
•  having elderly parents;
• anticipating a sizeable inheritance;
• having sizeable debt;
• pursuing a lucrative career;
• ownership of stock, a home or retirement fund; or
• avoiding a costly divorce.

A Binding Financial Agreement requires careful consideration of what might happen during a relationship and how the couple might plan their finances.

You and your partner should discuss your future plans including:

• whether you both intend to work during the relationship;
• whether you plan to have children;
• what arrangements there will be in relation to children that either of you currently have;
• what will happen if either of you can’t work because of illness or injury or the need to care for a disabled child;
• whether you wish to make special provision in relation to inheritances and if so what you expect to receive and what you expect to do with your inheritance;
• what provision you each intend to make for retirement;
• how you intend to meet your financial commitments and pay your living expenses; and
• whether you intend to have a joint bank account or intend to keep your finances separate.

After discussing your plans and considering how you will handle any unexpected situations, you should talk to your lawyer. A detailed statement of your current income, assets and liabilities will be needed. Also bank statements, shareholding and dividend statements, superannuation statements and other investments should be provided. You should not neglect to provide information about any of your assets or liabilities and you should provide information that is as up to date and detailed as possible.

You should allow plenty of time to discuss your agreement with your lawyer before the marriage or before commencing a de facto relationship. This will allow you the time to take into account the considerations that are important to yourself and avoid overlooking any past, present or future assets or liabilities that are relevant to the agreement. Adequate preparation time and care in planning will help to ensure the agreement is binding and the terms are acceptable to both parties.

If you are entering into a de facto relationship it is important to remember that any Binding Financial Agreement you have made will be of no effect if you and your partner marry. It is important to obtain legal advice well in advance of the marriage.

The lawyers at Byron Bay Family Law & Mediation Specialists Melbourne understand the legal requirements for a Binding Financial Agreement to be valid and enforceable. We can help to ensure your rights and entitlements are fully considered and protected in the event of separation. For couples who have a substantial asset pool, such as a major property/share portfolio or a family business, we understand the commercial importance of ensuring these assets are protected and can help to ensure your rights and entitlements are protected.

Byron Bay Family Law is a leading family law firm in Australia. Please contact us on 1300 635 529 to speak with a family lawyer from our law firm today. You can also send through your enquiry online now and we will contact you shortly.

Case: Family plans for peace of mind

After 16 years of marriage and the birth of three sons Mr and Mrs Harris were enjoying a happy marriage. But they were concerned about the impact future financial hardship could have on their boys. They entered into a Financial Agreement enabling them to protect themselves and their children by making financial provisions in all the circumstances they could envisage. Mr and Mrs Harris continue to work but feel they have their bases covered should any unwelcome situations develop.

A Financial Agreement will be set aside in the following situations:

• if the agreement was obtained by fraud. Fraud includes deception, trickery or  the failure to disclose something that is relevant;
• if circumstances have arisen since the agreement was signed which make it impracticable for the agreement to be carried out;
• if the agreement is void, voidable or unenforceable, this involves principles of contract law which your lawyer can explain to you;
• If a material change in circumstances has occurred relating to a child and as a result of that change the child, or the parent caring for the child, will suffer hardship if the court does not set aside the agreement;
• if a party has, at the time the agreement was signed, behaved in a way that was unconscionable; or
• if a superannuation interest has not been dealt with appropriately.

Case: Russian bride has Binding Financial Agreement set aside

A man met a lady from Russia. He travelled to Russia, married her and brought her back to Australia. The relationship was the only reason for the lady to be in Australia. The parties entered into a Binding Financial Agreement on return to Australia. No copy was given to the wife, the agreement took away many of the entitlements Australian family law would have provided to her. She claimed she signed the agreement when she was under physical, mental and emotional stress from her husband. Despite obtaining independent legal advice prior to the agreement who had correctly told her the agreement was likely to disadvantage her if she signed it, she signed it in any case, the Federal Magistrate concluded the husband’s actions could be recognised as causing duress and were enough to be regarded as unconscionable conduct which allowed for the agreement to be set aside. The Magistrate also noted that the failure to give his wife a copy of the agreement was a breach of the legislation.

Binding Financial Agreements can be made between parties to a marriage or between parties to a de facto (including same sex) relationship. These agreements can be made before, during or after the marriage or de facto relationship. A binding financial agreement entered into before marriage is sometimes referred to as a pre-nuptial agreement.

Binding Financial Agreements entered into before a marriage or de facto relationship define the ownership and value of property and financial resources owned by the parties (separately and/or jointly) at that time and specify how they are to be divided if the relationship breaks down. The agreement might also provide for the maintenance of either of the parties. The agreement gives the couple the peace of mind of knowing that if the relationship ends they have some certainty about the division of their property.

To be valid and binding, a Binding Financial Agreement requires careful consideration by the parties of what they require and what the future might hold. It is also important that the agreement is drafted carefully and accurately to remove any ambiguity and prevent future challenges.

For people who have already been through a relationship breakdown or are entering a de facto relationship with substantial assets, this peace of mind can be particularly important.

Case: Cameron And Michelle Plan For The Future

Cameron And Michelle Plan For The Future

Cameron and Michelle planned a wedding and were looking forward to the big day. Everything was organized except for the financial arrangements for their married life. Cameron had a thriving business and Michelle was the composite professional. Both had saved hard and had decent equity in property and share investment portfolios. They had both reached a level of financial independence long before they met. Although looking forward to married life, they also wanted to protect their property and investments, neither wanted unpleasant surprises and uncertainty if their marriage didn’t work out. Cameron and Michelle carefully considered the different possibilities their future might hold and how they would manage financially. They entered a binding Financial Agreement which provided for their own entitlements and those of any children, ensuring financial hardship and unnecessary legal costs were avoided in their future life.