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The Family Law Act and the Family Court Act now allow for more enforceable property agreements between:
- persons who are about to enter into a marriage or a de facto relationship;
- parties in a marriage or a de facto relationship; and
- parties who have separated.
The acts describes these as Financial Agreements, although the public would be more familiar with the term Nuptial Agreement.
Much comment has been made about putting “lifestyle” clauses in the agreement, however, generally the Act only recognises financial arrangements between the parties.
For the agreement to be effective it must be the subject of independent legal advice for each party on:
- the effects of the agreement on the rights of that party; and
- the advantage and disadvantage, at the time that the advice is provided to that party.
A binding financial agreement made prior to a relationship may be useful if there are likely to be significant assets brought into the relationship. Parties need to be aware that statistics show that 40% to 50% of marriages end in breakdown, and the rate for de facto relationships is even higher.
Property disputes can be extremely difficult and expensive to resolve in the breakdown of a relationship. A binding financial agreement may be a means of avoiding significant legal costs associated with the breakdown of relationships.
A binding financial agreement may be useful:
- to protect assets and likely inheritances being brought into a relationship;
- to ensure that children from a previous relationship inherit moneys;
- to protect family farms or other businesses;
- to protect the earnings of a higher income party in the relationship; and
- to avoid disputes and costs related to disputes about financial matters at the end of a relationship.
- It can be a negative start to a marriage or a relationship and suggests a lack of trust or lack of confidence in the relationship;
- There may be inequality in the bargaining position between the parties;
- There may still be a dispute at the end of the relationship, although it may be more about the contractual rather than Family Law rights;
- There may be substantial costs in drafting an agreement to cover all the circumstances; and
- There may be times when the agreements will not be binding.
The agreement may be set aside if:
- there was non-disclosure of a material matter relative to the agreement,
- there has been a substantial change in the circumstances of a child to the relationship, and
- there has been a degree of duress, misrepresentation or unconscionable behaviour by either party.
If you would like further advice on binding financial agreements, please don’t hesitate to contact us on 9375 3411 to make an appointment.