A financial agreement is a document which primarily records how the assets are to be divided
A financial agreement is a document which primarily records how the assets and financial resources of a couple in a marriage or a defacto relationship are to be divided if there is a breakdown of the marriage or the defacto relationship.
When can a Financial Agreement be made?
Financial Agreements can be prepared either:
- before entering into the relationship, or
- during the life of the relationship, or
- after the breakdown of the relationship.
For couples who are about to enter into or who are already bonded by a second relationship, financial agreements have a specific and practical attraction because:
- all or some of the assets and financial resources which each introduces into the relationship can by a financial agreement be excluded from the asset pool to be divided if there is a breakdown of the relationship;
- the assets and financial resources excluded in that way can therefore be preserved for the benefit of, say, the children of a first relationship.
Avoid messy, nasty and expensive litigation
From the practical viewpoint the attraction of a financial agreement is twofold:
- it introduces from an early stage an element of certainty into the otherwise uncertain waters of a relationship; and
- the fact that the parties have agreed in advance to a certain outcome, reduces the likelihood that they will become tied up with the significant emotional and financial stress of litigation if the relationship breaks down.
Putting it in perspective, it is not uncommon for financial disputes between separated couples to cost each party between $25,000 to $200,000 plus. Clearly this is money better spent in rebuilding the future.
Doing it right
A financial agreement to be binding must comply with a number of technical and complex requirements that are set out in the Family Law Act.Failure to comply with those requirements can be fatal because the agreement will then simply not be binding.
Where the financial affairs of a party or of both parties to a relationship are complex, complying with those technical requirements is also complex.
For these reasons a skilled and experienced family lawyer is best able to advise parties about a financial agreement, is best able to draw a financial agreement and will know about the technical requirements that must be complied with to make an agreement binding.
There is no point in wasting any time, effort or money in preparing a financial agreement which will not be binding or which will not have the intended effect.
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.