There are three different types of binding financial agreements provided for by the Family Law Act:

 

• financial agreements before marriage (pre-nuptial agreements) — s 90B [s 90UB — de facto agreement];
• financial agreements during a marriage — s 90C [s 90UC — de facto agreement];
• financial agreements after divorce order is made — s 90D [s 90UD — de facto agreement after the de facto relationship has broken down].

Thus, parties to a marriage and de facto couples able to document resolution of financial issues between them an agreement (rather than entering into Consent Orders).

Parties planning to get married can too enter into a pre-nuptial agreement; o parties could enter into an agreement to alter their interests in property whilst still married.

Financial Agreements – De Facto Parties

Today the Family Law Act makes provision for binding agreements between de-facto couples, including of course both same sex and opposite sex partners.

Binding financial agreements no longer require any approval by a Family Law Court to be binding and enforceable.

Terminating an Agreement

Binding agreements once entered into, cannot be varied and there are limited circumstances in which agreements can be set aside by a Court. However, parties may choose to terminate them. The termination is affected by parties signing a terminating agreement or alternatively for a new binding agreement to include provision for terminating an existing agreement.

Often clients are concerned about the potential for future applications to set aside the binding financial agreements. This potential is of course greater with pre-nuptial or pre-relationship agreements due to the length of time between the actual execution of the agreement and the date of separation or divorce.

Amongst other things, during that the extended period of time there will be many changes and in the circumstances of the parties. Thus what seemed to be a perfectly reasonable agreement in 2016 by 2016 may appear like a totally inappropriate and unreasonable agreement for one party because of changed or unforeseen circumstances. What are those circumstances that may affect the circumstances of the parties?

• Birth of a child or children.
• Separation and/or divorce.
• Reconciliation.
• Serious illness or injury.
• Loss of assets, significant increase or decrease in their value.
• Acquisition of other assets in the future.
• Bankruptcy.
• Significant changes in the employment circumstances of one or both of the parties.

The list is by no means exhaustive. How are those circumstances relevant? Because they may become one of the grounds for the court to set aside a perfectly otherwise valid binding financial agreement.

Setting Aside an Agreement

The Family Law Act sets out the various circumstances in which a Court may set aside or terminating a financial agreement. The grounds include:-

• Fraud (including non-disclosure of a material matter).
• The Agreement is void, voidable or unenforceable.
• Because of circumstances that have arisen since the Agreement was made, it is impracticable for the Agreement to be carried out.
• Because of changed circumstances since the Agreement was made relating to children, a party will suffer hardship if the Agreement is not set aside.
• A party has engaged in “unconscionable conduct” since the Agreement was made.
• There is a “payment flag” under Part VIIIB.
• The Agreement covers at least one superannuation interest that is unsplittable.
• The Agreement was entered into for the purpose of defeating creditors or with reckless disregard to the interest of creditors.
• The Agreement was entered into for the purpose of defeating a claim of a de facto partner of one of the spouse parties to the Agreement or with reckless disregard to the interests of that person.

Our solicitors are fully knowledgeable of the potential pitfalls of the agreements and will be able to advise you on how to avoid them. Where appropriate we will work with accountants, financial and tax advisers to maximise the best possible outcome in your case.

How Can We Help You?

We specialize in the area of family law and divorce. We provide tailored service suitable in your particular circumstances:

• We advise as to your rights and obligations actual and potential.
• We assist you in selecting and negotiating the best terms of your prenuptial agreement (or other BFA) in your circumstances.
• We help you formalise the binding financial agreement and make it legally binding and enforceable.

We have assisted many couples to avoid court disputes and settled their issues by means of a properly done financial agreement.