A financial agreement is a written agreement that stipulates about division of properties between parties

Financial agreements before marriage are more popularly known as prenuptial agreements. It is a written agreement that is entered into by parties who are contemplating marriage. It can also be made by individuals who are about to start a de facto relationship.

What can be stipulated in the financial agreement?

The parties can include how they will divide their properties and financial resources in case the marriage fails. They can also agree about superannuation, spousal maintenance and other issues that are necessarily related to their assets.

The parties can stipulate how they will divide and use their assets during their marriage, during separation and after divorce. Other subjects may also be about adult child maintenance, claims against the estate of a deceased party and whether the agreement is meant to override or amend a previous financial agreement.

Is it binding?

Yes, as long there is compliance with all the requirements. First of all, it must be in writing and signed. The parties must not be spouse parties to another agreement that bears the same stipulations. It must also expressly state that it is executed pursuant to Section 90B of the FLA.

Parties must have independent legal advice prior to signing. It is best practice to consult a lawyer first so that the effects or consequences of the document will be known before signing. Parties must make a full and frank disclosure of their assets, properties and business interests at the time of the execution.

A party who wants to revoke an agreement must file a case in court if there is no amicable settlement with the other party. Fraud, duress and undue influence are some of the grounds for invalidation or revocation. Courts can order the agreement to be set aside if it determines that there is a significant change in the circumstances of the parties such that the terms have become impractical or will cause hardship.  

What are the advantages?

Having a prenup before marriage is a prudent decision especially when there is a clear disparity in terms of wealth between the parties. It is meant to avoid litigation about property matters if the marriage goes sour. The agreement will serve as a guide with respect to the ownership, division and management of assets.

A financial agreement is not the same as a court order. However, it is extremely reliable because contractual principles apply.

Parties may consider applying from the court for consent orders based on the terms and conditions in the agreement. In issuing the consent order, the court will only consider whether the stipulations are just and equitable. Consent orders have the force and effect of a court order thereby making it legally binding and enforceable.