Introduction to Financial Agreements
Nothing kills the romance quite like asking, “So, who gets the house if this all goes pear-shaped?”
Still, awkward conversations now can prevent expensive courtroom drama later.
Most people have heard the term “prenup”, usually from films or celebrity gossip.
In Australia, a “prenup” is generally a Financial Agreement made under the Family Law Act 1975 and allows couples to take control of their financial future by deciding for themselves what will happen if their relationship ends, rather than leaving those decisions to a court.
It puts their financial destiny in their own hands and provides greater certainty when it matters most.
This article explains what a Financial Agreement is, when it can be made, what it needs to be legally binding, and why getting it right matters.
What is a Financial Agreement?
A Financial Agreement is a written agreement between a couple that sets out how their property, financial resources, both at the time the agreement is made and in the future, will be divided if a marriage or de facto relationship breaks down.
A Financial Agreement can also provide for spousal maintenance, which is financial support paid by one former spouse or de facto partner to the other when they cannot adequately meet their reasonable expenses and the other party has capacity to pay.
Who can make a Financial Agreement and When?
A Financial Agreement can be made by married couples under Part VIIIA of the Act, or by de facto couples under Part VIIIAB. Both married and de facto couples can enter into an agreement at different stages of their relationship.
They can be made:
- Before Marriage or a De Facto Relationship, which is made before the wedding or before the couple begins living together as de facto partners, and it sets out how assets will be divided if the relationship later ends;
- During the Marriage or De Facto Relationship;
- After Divorce or Separation, which can even be done in the absence of a formal order for divorce.
Can a Financial Agreement be changed or ended?
A Financial Agreement does not last forever simply because it was validly made. The parties can terminate an agreement, generally by entering into a further agreement known as a termination agreement, which must satisfy the same formal requirements.
Parties can also choose to replace an earlier agreement with a new one as their circumstances change, for example moving from a pre-marriage agreement to a new agreement entered into during the marriage.
Why you should not attempt a DIY Financial Agreement
There are strict requirements for when Financial Agreement is binding.
A poorly prepared agreement can fail entirely, leaving a couple without the protection they thought they had, often not discovering the problem until years later when the relationship has already broken down, when it is all too late.
A Financial Agreement will generally be binding if it is in writing and signed, and each party receives independent legal advice before signing. Strict formal requirements apply, so both parties should obtain advice from separate lawyers.
What matters to you
A Financial Agreement is not about expecting a relationship to fail. Like insurance, it is about planning responsibly for an outcome you hope never occurs, but if things go wrong, it can provide clarity, protection and peace of mind.
Because strict legal requirements apply, and an agreement may be challenged or set aside in some circumstances, each party should obtain independent legal advice.
If you are considering a Financial Agreement before, during or after a relationship, our Adelaide family law team can explain your options and help you prepare an agreement suited to your circumstances.
If you are still unsure, read our article "Should You Get a Prenuptial Agreement?"
Contact Wadlow Solicitors or call (08) 8212 2955 and schedule an appointment with our family lawyers.
