financial agreements between two people are written and compliant with the family law act
financial agreements history
While they are similar to prenuptial agreements in function, financial agreements can be signed at any stage before, during or even after a marriage.
The financial agreement outlines each party's agreement to the financial arrangements, in order to avoid the need for going to court over property matters. It may even include matters such as claims on each party's estate in the case of death, as well as child and spousal maintenance.
Financial agreements may cover the topics of spousal maintenance, superannuation, and division of debts, finances and property after the breakdown of a marriage.
Both parties should have a signed copy of the financial agreement in order for it to be legally binding, and both parties should have received independent financial and legal advice prior to signing the agreement. Financial agreements differ in type, and may include:
s90B: In contemplation of a marriage;
s90UB: In contemplation of a de facto relationship;
s90C: During a marriage;
s90UC: During a de facto relationship;
s90D: After divorce;
and s90UD: After a breakdown of a de facto relationship.
The reason for seeking independent legal advice is because the court does not review or confirm financial agreements before parties have entered into it.
What Should I Know Before Signing a Financial Agreement?
Financial agreements should be planned for long before the wedding so as to avoid possible disruption or abandonment of the wedding. Some legal advisers suggest drafting an s90C (during marriage) agreement which parties sign after the wedding.
Be sure to check the document carefully. The passing of time from execution of the agreement to when mistakes or omissions are discovered could make unintended consequences or unfairness in certain matters worse.
Are Financial Agreements Binding?
Unlike a court order, a financial agreement is governed by a statute. The court has to determine the validity of a financial agreement, based on the law's contractual principles and it may grant remedies.
What's the Difference Between a Financial Agreement and a Consent Order?
Parties finalising property settlement agreements have to choose whether they want financial agreements or consent orders.
- It is important to note that consent orders may not be filed prior to a marriage.
- Financial agreements require independent financial and legal advice for both parties.
Financial agreements may include a superannuation agreement.
Can Financial Agreements Be Enforced?
A financial agreement is not just a formality. Be sure that you consider the agreement carefully prior to signing. Consider how a property will be divided in case of separation.
We advise that you seek good legal counsel to help you foresee and avoid unintended consequences. Some provisions may defeat the purpose of the agreement, specifically in cases where one party would like to retain a piece of property, and it mistakenly becomes assigned to all other property that is divided equally.
What Happens If a Party is Deceased?
Each financial agreement has a different outcome in the case of death of a party. Unless the agreement is specifically revoked, it remains binding even after one of the parties dies.
s90UK and s90H financial agreements will remain binding and may even benefit deceased parties' estates, even if it is not explicitly stated in the agreement.
When one or more de facto party dies, or if the married parties divorce or die, parties don't have to sign separation declarations.
In NSW, a deed of release can be included in a financial agreement, which will render the other party unable to make claims against the other party's estate, particularly if an adequate provision was made in the deceased party's will. The release will have to be approved by the Supreme Court before it becomes binding, although it is generally considered that the party has the intention to give up his / her rights to such claims.
Maintenance and Financial Agreements
Parties have to assign numeric values to amounts specified as maintenance payments. Parties who wish to agree to omit spousal maintenance should insert $1.00 as the amount each party will pay to the other party.
The court may override provisions where parties state that they will not claim spousal maintenance.
Financial Agreements - Third Parties
Third parties could be family members, trusts, companies and creditors. If there are concurrent relationships, the effects of the agreement on those parties should also be considered.
Costs of involving third parties in the financial agreement should also be considered, as well as the costs of independent legal advice for each individual in order to make the agreement valid.
Terminating a Financial Agreement
Financial agreements can be terminated either by signing a new agreement, with a provision to terminate the old agreement or with a termination agreement.
The legislation does not make specific provision for sunset clauses or automatic termination.
Financial agreements were first introduced in 1975 and added to the Family Law Act in 2000.
In 2009, amendments were made to allow a de facto couple to enter financial agreements.
The validity of the financial agreement was tested in 2008 when the Family Court ruled that financial agreements weren't binding unless it strictly complied with legislative requirements.
In 2009, the rules were amended to allow the court to declare a financial agreement binding, despite non-compliance with certain formalities.
Disclaimer : This article provides basic information only and is not a substitute for a professional or legal advice. It is prudent to obtain legal advice from a family lawyer.