Before or during the relationship you may enter into a legal contract which decides how financial and other affairs, including maintenance and property rights will be arranged. To be enforceable this agreement must comply with precise rules and thus requires independent legal advice for both parties.
A married couple or defacto couple having separated can reach an agreement as to the division of their assets and liabilities. The agreement can be formalised by Consent Orders or a Binding Financial Agreement. Information you need to know about Binding Financial Agreements is set out below:
The Family Law Act provides for Binding Financial Agreements being made namely:
- Before marriage (Section 90B)
- During marriage (Section 90C)
- After divorce (Sction 90D)
- Before defacto relationship (Section 90UB)
- During defacto relationship (Section 90UC)
- After breakdown of defacto relationship (Section 90UD)
A Financial Binding Agreement must meet the following requirements in order to be binding namely:
- Be in writing
- Specifiy whether it is made under Section 90B or Section 90C or Section 90D or Section 90UB or Section 9UC or Section 90UD
- Be signed by both parties
- Be between parties contemplating entering into a marriage with each other or parties to a marriage or parties to a former marriage
- It must deal with property, financial resources and/or spousal maintenance of the parties or matters incidental or ancillary to those matters
- The Agreement must include a statement that before the Agreement was signed by both parties that Independent Legal Advice was provided by separate legal practitioners, including the effect of that agreement and the rights of that party and if it was to the advantage or disadvantage of the parties who entered the Agreement at that time.
The Agreement must contain certificates signed by the solicitor for each party providing that the solicitors gave Independent Legal Advice to each respective party.
Once the Agreement is signed one party must receive the original Agreement and theother party must receive a copy.
The document must specify the extent if any spousal maintenance is provided or not.
The reasons for Binding Financial Agreements include the following:
- To protect the assets which may be inherited during a relationship
- To protect the assets of one party where there is a significant difference in wealth of the parties
- It can protect prior assets as well as ensuring that children of previous relationships inherit those prior assets
- It can protect the rights of the party who wants the certainty afforded in a formal agreement rather than face the discretion available in the Family Court under the Family Law Act.
You need to ensure that when receiving advice about entering into a Binding Financial Agreement, full disclosure of all assets and liabilities are made by both parties and all the above requirements are met in order to be a binding agreement.