When it comes to property and financial agreements under Australian family law, it is always best to seek the advice of a family lawyer. This is because there are a number of complex legal issues that need to be considered when entering into such an agreement.
Some of the key issues that need to be taken into account include:
- Whether the agreement is fair and equitable
- The financial needs of both parties
- The impact of the agreement on any children involved
- The tax implications of the agreement
- The stamp duty implications of the agreement.
A family lawyer will be able to advise you on all of these issues and help you reach an agreement that is in your best interests. In this article we look to help answer some questions you may have when it comes to your understanding around financial agreements for families.
What is a financial agreement?
A Financial Agreement is a contract signed under Part VIIIAB (for de facto relationships) or Part VIIIA (for marriages) of the Family Law Act of 1975 between two or more parties. If enforceable, a Financial Agreement abrogates the court’s authority over any financial disputes between the parties generally or over particular matters. In other words, a Financial Agreement can be a vehicle to “contract out” of court proceedings if it is properly drafted and entered into. It doesn’t matter if the person is married, divorced, de facto or in a same-sex relationship.
Under the Family Law Act, everyone is treated equally, and anybody in Australia can form a financial arrangement. A financial agreement can “cover the field” by addressing every facet of the parties’ financial relationship. A Financial Agreement, however, can potentially solely address some concerns, such as married or de facto support.
When can we enter into a Financial Agreement?
A Financial Agreement can be signed before (section 90B) or during (section 90C), or after (section 90D) a marriage (section 90D). Before signing a Financial Agreement, it is necessary to get independent legal counsel.
De facto Relationship
A person can sign a Financial Agreement before, during, or following a de facto relationship (section 90UB) or after a de facto relationship (section 90UC) (section 90UD). Before signing a Financial Agreement, it is necessary to get independent legal counsel.
Before agreeing to a Financial Agreement, each party must have independent legal counsel from an Australian attorney about the specified subjects.
Is a Financial Agreement binding?
Sections 90G (for Financial Agreements concerning marriages) and 90UJ (for Financial Agreements about de facto relationships) of the Family Law Act of 1975 specifies the technical conditions that a Financial Agreement must satisfy to be legally enforceable. Financial agreement law is a particularly complicated area of the law. A person should get legal counsel if they are a party to a Financial Agreement (or a fictitious Financial Agreement) that might take effect.
When they were made initially accessible to married couples in 2000, binding financial agreements were known as “Binding Financial Agreements” under the Act. The word “binding” was removed for reasons that are only known to those who wrote the law, and since 2008 they have only been referred to as “Financial Agreements.”
Can the court set aside a Financial Agreement?
Sections 90K (for Financial Agreements concerning marriages) and 90UM (for Financial Agreements about de facto relationships) of the Family Law Act 1975 specify the conditions under which the court may set aside Financial Agreements.
The Family Law Act’s sections 90K (for married couples) and 90UM specify the conditions under which an agreement may be “put aside” (for de facto couples). A court may only annul a financial agreement if it is shown that:
- the agreement was acquired fraudulently, particularly via the inability to disclose a relevant item (when one party withholds crucial information);
- the arrangement was made with reckless disregard for a creditor’s interests or with the intent to cheat a creditor;
- a de facto connection with a spouse or partner, and the agreement was made with the intent to deceive that person;
- A payment flag is active on a superannuation interest covered by the agreement, and there is no reasonable likelihood that a flag lifting agreement will terminate the flag’s operation;
- a party acted in a way that was, under all the circumstances, unconscionable to the agreement;
It’s not simple to set an agreement aside, and a party must have a valid reason for the court to issue an order to set an agreement aside.