What is a financial agreement?
Financial agreements are a means for couples (de facto or married) to opt out of the court’s jurisdiction to deal with financial matters (i.e. property settlements and spousal maintenance), and instead enter into a type of contract for the division of assets and spousal maintenance.
Financial agreements can be entered into:
(a) Before marriage (known as pre-nuptial agreements);
(b) During a marriage (regardless of whether divorce has occurred); and/or
(c) After divorce.
Documenting your agreement
Upon separation, a division of your property pool will need to be affected. Division of the property pool can be achieved in a number of ways, including:
1. by coming to an agreement between yourselves, without court involvement, and informally dividing up the assets (normally referred to as a hand shake deal);
2. if you agree on arrangements for property division, you can formalise your agreement by:
(a) Applying for a consent order in the Family Court; and/or
(b) Entering into a financial agreement; or
3. If you cannot agree on arrangements for property division, you can apply to the court for financial orders which relate to property settlement and spousal maintenance (for more information, see court process).
The below explores option 2(b), above (entering into a financial agreement).
Is your financial agreement binding?
In order for the financial agreement to be binding:
1. It must be in writing and signed by all parties to the financial agreement;
2. The parties to the agreement must not be party to another financial agreement concerning property settlement or spousal maintenance matters;
3. The financial agreement must state the relevant section of the family law legislation;
4. Before the financial agreement is signed the parties to the financial agreement must receive adequate advice from their independent lawyers, including advice in respect to:
(a) The effect of the agreement on the rights of that party and about the advantages and disadvantages of that party to enter into the agreement
(b) The effect of the agreement on the rights of that party;
(c) Whether or not, at the time when the advice was provided, it was to the advantage (financially or otherwise) of that party to enter into the agreement;
5. The parties must each receive a statement from their legal practitioner that sufficient advice was provided, and a copy of that statement has been exchanged with the other party; and
6. The financial agreement cannot have been terminated or set aside by a court.
Is a financial agreement suitable for you?
While the preferred method is a consent order, there are circumstances where financial agreements are suitable. For example:
1. If the appropriate time limit has expired;
2. A spousal maintenance ‘release’ (releasing your right to claim spousal maintenance) is required; or
3. The agreement is unlikely to be approved by the registrar for example because of the structure or payment terms of the agreement.
For more information about documenting your agreement, please contact our Gold Coast family law team.