Spouses can make binding financial agreements during marriage

If you plan to get married, you can make an agreement with your future spouse about how finances will be handled during your marriage or in the event of a divorce. That kind of agreement is often known as a prenuptial agreement. You can make a similar agreement even after you are married.

This article explains how to make a binding financial agreement during a marriage.

Contents of agreement

Section 90C of the Family Law Act 1975 requires a court to enforce certain agreements made between spouses during a marriage. The court will enforce agreements that that address these issues:

• How property and financial resources will be divided in the event of a divorce.
• The maintenance of either spouse during the marriage and/or after a divorce.

Other issues that are related to property or maintenance.

A financial agreement under section 90C can be made while the marriage is still intact or after the spouses have separated, but it must be made before a divorce. Agreements made after a divorce are addressed in a different statute.

Legal effect of a binding financial agreement made during a marriage can be made binding on the court if certain legal requirements are followed. “Binding” means that the court will enforce the agreement under most circumstances, even if the court has reservations about the fairness of the agreement.

Courts have limited authority to set aside binding financial agreements rather than enforcing them, but it is very difficult to meet the legal standard that must be satisfied before the court will set aside an agreement. Parties to a marriage should therefore be certain that they want to be bound by the agreement before consenting to it.

Legal requirements for a binding financial agreement

Strict requirements must be followed to make a financial agreement binding. They include:

• The agreement must be in writing.
• The agreement must be signed by both parties.
• The agreement must contain a statement in which both parties acknowledge that they received independent legal advice before entering into the agreement.

Certificates must be provided to each party confirming that the party received independent legal advice.

The agreement remains binding on the parties unless and until it is set aside or terminated by a court order.

Independent legal advice

The legal advice required to make the agreement binding must be provided by a practicing lawyer. The same lawyer cannot advise both spouses. The advice must explain the effect of the agreement on the rights of the spouse as well as the advantages and disadvantages of entering into the agreement.