The Family Law Act allows married or de facto couples to make legally enforceable contracts known as “binding financial agreements” about their property. These agreements can be made before, during or at the end of a relationship. Financial agreements made before a marriage are often called “pre-nuptial” agreements.
Binding financial agreements can also cover what if any spousal maintenance is to be paid in the event a relationship breaks down.
It is essential for agreements to be binding that both parties have independent legal advice. There are many technical requirements which if not adhered to, may result in the agreement being set aside many years after the agreement is entered into.
Further, the intent of a financial agreement may seem simple, but if the agreement is not carefully drafted, there can be unintended consequences. Accordingly, it is very important that both parties obtain advice from experienced family lawyers.
Do’s and Don’ts of Binding Financial Agreements
• Carefully think about how the agreement will work in practice. Does the agreement require each party to keep proof of every amount spent on day to day expenses or assets for the entirety of the relationship? If so, the agreement is unlikely to be adhered to;
• Be aware contract law applies to binding financial agreements. They can be set aside in specific circumstances (eg where there is fraud, duress or unconscionable behaviour);
• Do ensure both parties give full disclosure of their financial position. Lack of disclosure may be a ground for setting the agreement aside;
• Don’t enter into an agreement shortly before a wedding. The threat of an impending wedding may be a form of duress resulting in the agreement being set aside.
Want more information about Binding Financial Agreements?
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