Many people think that an agreement reached with their former partner or spouse is legally binding, as long as they have each signed off on a document or verbalised their agreement. Unfortunately, that is not the case. If you would like your agreement to be legally binding and enforceable through the Courts, one way to formalise your agreement is through entering into a Financial Agreement.

What is a Financial Agreement?

A Financial Agreement is a private agreement or contract which sets out how property or assets (including superannuation) are to be divided in the event of a relationship breakdown. Financial Agreements can also cover the issue of spousal or de facto maintenance.

Who can enter into a Financial Agreement?

Financial Agreements can cover both de facto relationships and marriages. Couples can enter into Financial Agreements at any stage, including:

  1.  Prior to moving in to live together;
  2.  Prior to getting married;
  3.  During a relationship (de facto or marriage); or
  4.  Following the breakdown of a de facto relationship or marriage.

Financial Agreements entered into prior to marriage (or moving in with a de facto partner), are used in order to reduce the potential for dispute and costly legal proceedings in the event of a separation. These types of agreements can also be useful in protecting property or assets acquired before the relationship, or property which may be received in the future by way of inheritance or family gifts.

Does the Agreement cover my business or company?

Financial Agreements are able to protect your business (or company) from any future claims brought by your former spouse or partner. Any business or company needs to be taken into consideration as property relevant to your property settlement. This is particularly important if you and your partner or spouse are involved in running a business or company together. The Agreement can set out in detail what is to happen to the business in the event of separation.

Requirements of a Financial Agreement

A key requirement of entering into a Financial Agreement is that each person to the agreement needs to obtain independent legal advice. This means that each person must receive legal advice from a different lawyer. The advice provided must address the following factors:

  1.  The nature of the Agreement and the effect of the Agreement on the person’s rights; and
  2.  The advantages and disadvantages of entering into the Agreement, at the time of signing it.

What is the process involved?

Typically, one person’s lawyer will prepare a draft Financial Agreement, which will then be sent to the other person’s lawyer for review and consideration. Once both parties are satisfied in relation to the terms of the Financial Agreement, each party and their respective lawyers are required to sign the Agreement.

It is important to note that, although Financial Agreements do not need to be approved by the Court, the Court retains the right to set aside your Financial Agreement. We are able to provide you with specific advice regarding when a Court is able to set aside Financial Agreements.

Our highly experienced Family Lawyers at Tonkin Legal Group are here to advise and provide help, so book an appointment with us today.

This is intended as general information only. For more information about your property settlement and divorce, please contact our Family Law team on (03) 9435 9044.