Binding financial agreements are recommended in 2 situations:
1. Where a couple (in an existing relationship or intending to enter into a defacto
relationship or marriage) wish to agree about how they will divide their property
if they separate. (These agreements are often colloquially called a “prenuptial
agreement” or “cohabitation agreement”.)
2. Where a couple have separated and they have agreed on their financial arrangements
and they wish to formalize this agreement in a binding way.
If a couple does not have a Financial Agreement and they separate, their property
will be divided in accordance with the principles established in the Family Law
Act and subsequent cases, and this usually means that all of the property of the
parties at that time is included. Having an agreement will mean that the Family
Law Act will not apply; the provisions of the agreement will. Therefore having such
an agreement can save a significant sum of money including the costs associated
with property settlement negotiations or litigation. It can be compared to income
protection insurance or life insurance.
A Financial Agreement precludes the Family Court from determining a dispute between
the couple about a division of their property. Such agreements set out how the parties’
property, liabilities and financial resources will be divided if they separate in
the future, or now if the parties have already separated.
“Prenuptial” or “cohabitation” Financial Agreements are often used where one party
has significant property and wishes to keep some of it separate from the other party
for example for future estate planning for children.
Financial Agreements also provide parties with the opportunity to ‘contract out’
of the Family Law Act in relation to spousal maintenance. That means that, provided
the legislation has been strictly complied with, parties can eliminate the risk
that their former partner will attempt to claim spousal maintenance from them in
the future. However it is important to recognise that this option is not available
to everyone. For example, if at the time a Financial Agreement comes into effect,
a party to the Financial Agreement is unable to support him, or her, self without
a means-tested government benefit the option to ‘contract out’ of spousal maintenance
is not available.
For these agreements to give a couple the protection they seek when they enter them
they must be done properly and strictly in accordance with the legislation. Each
party to the Financial Agreement must have obtained independent legal advice and
must contain a certificate from the legal practitioner confirming that the practitioner
has advised their client, independently of the other as to effect of the agreement
on the rights of that party; and the advantages and disadvantages, at the time that
the advice was provided, to the party of making the agreement.
People with complex business structures need to take particular care that they consider
potential problems under any commercial contract with third parties. They should
also seek advice as to the revenue implications including stamp duty and tax. Other
structures or documents may need to be reviewed as an overall financial planning
or succession strategy.
Murdochs do not produce these agreements for a fixed fee. To ensure that the agreement
addresses the couple’s actual circumstances, is clear and unambiguous and likely
to stand up to scrutiny and be upheld by a court if later disputed we charge our
normal hourly rate for the actual time spent for the important legal work involved.
WHERE TO NOW?
If you would like to speak with an expert to discuss your family law issue, please
call us on (07) 3007 9898 or send us an email at
enquiry@murdochs.com.au