Financial Agreements

Parties can now contract out, in part or in whole, the provisions in the Family Law Act regarding:

• Property settlement and/or
• Spouse maintenance
• Parties cannot, however, contract out of the Family Law Act in relation to:

• Children’s issues; and/or
• Child maintenance or support.

The prenuptial agreements (known as “Financial Agreements”) can be entered into by couples contemplating entering into a marriage with each other. The Agreements can govern how, in the event of a breakdown of the marriage, property division and spouse maintenance is dealt with.

Financial Agreements can also be entered into by couples during a marriage. Once again, these Agreements can deal with how, if the marriage breaks down, issues of property settlement and spouse maintenance can be resolved.

In order for a Financial Agreement to be binding under the Family Law Act:

The agreement must be signed by both parties;

The agreement must contain a statement that each party has been provided with independent legal advice from a legal practitioner as to:

• The effect of the agreement on their rights
• Whether or not at that time when the advice was provided, it was to the advantage financially or otherwise of that party to make the agreement
• Whether or not at that time, it was prudent to make the agreement and
• Whether or not at that time and in light of such circumstances as were at that time reasonably foreseeable, the provisions of the agreement were fair and reasonable

Certificates signed by each lawyer providing the independent legal advice must be annexed;

The agreement must not be set aside by a Court; and

After the agreement is signed, the original agreement must be given to one party and a copy to the other.

A binding Financial Agreement continues to operate despite the death of a party to the agreement, and operates in favour of and is binding on the personal representatives of that party.

The Court may set aside a Financial Agreement if:

• The agreement was obtained by fraud
• The agreement is void, voidable or unenforceable
• If circumstances arising since the agreement was made, make it impracticable for the agreement or part of it to be carried out
• Since the making of the agreement, a material change in circumstance has occurred (being circumstances relating to the care, welfare and development of a child of the marriage) and as a result of the change, the child where the applicant has the care and responsibility for a child, or a party to the agreement, will suffer hardship if the Court does not set the agreement aside or
• If a party engaged in conduct that was unconscionable when making the agreement

The advantages for couples entering into such agreements are:

• To provide certainty
• To protect ownership of assets brought into a marriage
• To protect ownership of special assets acquired during a relationship (for example an inheritance)
• To protect ownership and retention of business interests
• To prevent costly, lengthy litigation if the relationship does breakdown
• To provide peace of mind to couples in a relationship in relation to financial matters in the event of their relationship breakdown
• Because such agreements will be binding on the estate in the event of death

Those most likely to benefit most from prenuptial agreements are:

• Parties entering into their second marriage, to avoid the stress and cost associated with the potential breakdown of their second marriage and to provide for pre-existing children
• Couples employing asset protection. For example, where couples put all personal assets in the wife’s name, an agreement can be filed acknowledging the husband’s financial interest regardless of whose name the property is in
• People with substantial assets who are already in a relationship and who need to protect their interests and require certainty
• People who have substantial assets and who are about to enter into a relationship;
• People entering into second or subsequent relationship/marriage

• Parties entering into their second marriage, to avoid the stress and cost associated with the potential breakdown of their second marriage and to provide for pre-existing children
• Couples employing asset protection. For example, where couples put all personal assets in the wife’s name, an agreement can be filed acknowledging the husband’s financial interest regardless of whose name the property is in
• People with substantial assets who are already in a relationship and who need to protect their interests and require certainty
• People who have substantial assets and who are about to enter into a relationship
• People entering into second or subsequent relationship/marriage