Binding Financial Agreements

Binding Financial Agreements

If you and your partner are able to agree the division of your property, you can formalise these arrangements outside of court by entering into a Financial Agreement. This can happen following separation, during your marriage or de facto relationship, or before your marriage or de facto relationship.

A Financial Agreement is a binding and enforceable contract made under the Family Law Act 1975 which sets out how the property of a relationship will be divided in the event of a separation.

It is important to consider a Financial Agreement when:

• You wish to protect your assets or business in the event of separation;
• You want to agree upfront the terms of your property division;
• You want to avoid the risk of litigation;
• You want certainty about your financial future;
• You want formalise an agreement about future payments of spousal maintenance.

A validly executed Financial Agreement ousts the jurisdiction of the Federal Circuit and Family Court of Australia to make orders about the division of your property or in relation to other issues, for example, whether or not either party should make payments of spousal maintenance to the other. Instead, parties are able to make their own arrangements about how their financial separation is structured.

Because Financial Agreements purport to oust the jurisdiction of the Court, the law about them is complex. The Agreements themselves must meet certain technical requirements in order to be binding. Importantly, all parties to a Financial Agreement are required to obtain independent legal advice

The Court has the power to set aside a Binding Financial Agreement in some circumstances. This can include:

1. Where a court is satisfied that the agreement was obtained by fraud including non-disclosure of a material issue;
2. Where a party to an agreement entered in to the agreement for the purpose of defrauding or defeating a creditor, or with reckless disregard of a creditor’s interests;
3. Where a party to the agreement entered into the agreement to defraud a de facto partner or to defeat the interests of the de facto partner under the Family Law Act 1975, or with reckless disregard to those interests;
4. The agreement is void, voidable or unenforceable under the general law;
5. When making the agreement a party to the agreement engaged in conduct that was, in al the circumstances, unconscionable;
6. In the circumstances which have arisen since the agreement was made, it is impracticable for the agreement or part of the agreement to be carried out;
7. Since the agreement was made a ‘material change’ in circumstances has occurred and, as a result of that change, the child or a party to the agreement will suffer hardship if the court does not set the agreement aside;
8. There is a payment flag operating under Part VIIIB on a superannuation interest covered by the agreement and there is no reasonable likelihood that the operation will be terminated by a flag lifting agreement;
9. The agreement covers an unsplittable superannuation interest for the purpose of Part VIIIB.

At Empower Family Law and Mediation, we can help you to ensure that your Financial Agreement clearly sets out your agreement and meets all legal requirements. 

From your very first conference with us you will know where you stand, what your options are and what to expect.

That is why your first 30-minute consultation with us is FREE.

Let us be your voice in troubled times.