A Financial Agreement is a private contract between you and your either soon to be, current or former partner or spouse. They are also called “Pre-nups” or “Post-nups”.
Financial Agreements removes the power of the Federal Circuit and Family Court of Australia (the Court) in relation to all financial matters to which the Agreement applies (it can relate to the division of assets, superannuation, financial resources as well as setting out or removing the right to any spousal maintenance entitlements).
This means that if the Agreement is binding, the Court does not have the power to make any orders for a property settlement or the payment of spousal maintenance for either of you or soon to be or current partner (if you ultimately separate in the future) or following separation.
Given that Financial Agreements effectively take away a parties’ right to seek relief from the Court, there are very strict legal requirements under the Family Law Act 1975 (Cth) (the Act) that must be met when entering into one.
You can enter into a Financial Agreement in in the following circumstances:
Financial Agreements serve a specific purpose. They can:
The Act specifies that in order for a Financial Agreement to be binding:
In relation to spousal maintenance, the Agreement must provide:
Even if the above procedural requirements are not strictly satisfied, the Court has the power to find that the Agreement is binding if it is satisfied that it is unjust and inequitable if the Agreement was not binding.
A Financial Agreement will not take effect until a Separation Declaration is signed by you or your former partner. The Declaration is usually included in the Agreement itself and has strict requirements.
In relation to spousal maintenance, the Court may still have the power to make an order for spousal maintenance if the Court is satisfied that, when the Agreement came into effect the circumstances of a party were such that taking into account the terms and effect of the Agreement, that person was unable to support themselves without an income tested pension allowance or benefit.
A Financial Agreement can end only in the following ways:
It is important to remember that once the Agreement is entered into it will be considered binding and the setting aside of any legal agreement, whether a Financial Agreement under the Act or otherwise, is a difficult and expensive process. The question as to whether the Agreement is valid, enforceable or effective is determined by a Court pursuant to the principles of law and equity.
Our Family and Relationship Law team at Coulter Legal have extensive knowledge and experience to help you navigate the Financial Agreement process and whether it is the best way to formalise your property settlement or spousal maintenance entitlements.