Financial Agreements

Parties can enter a financial agreement:

  • before marriage (commonly referred to as a prenuptial agreement),
  • during the course of marriage, or
  • after divorce.

In de facto relationships, financial agreements can be entered into:

  • prior to cohabitation,
  • during cohabitation, or
  • after separation. 

Financial agreements in marriage and de facto cases entered into prior to the relationship, or during the relationship but before separation, are somewhat speculative in their nature. These types of financial agreements make provision for the financial settlement each party is to receive if they separate. 

When entering into financial agreements lawyers are required to give advice to the parties on:

  • the effect of the agreement,  
  • the parties’ rights and
  • the advantages and disadvantages of the agreement. 

A financial agreement will generally take away the right of a party to apply to the Court for a financial settlement.

Advising on the advantages or disadvantages of the agreement when it is entered into either before the relationship commences or prior to separation is difficult. The advice should cover how a financial settlement would be achieved upon separation in the absence of a financial agreement – whether a party will be better or worse off because of the agreement. 

Many people value the peace of mind provided by a financial agreement prior to or during a relationship  - this way they have some certainty about what will happen if the relationship ends.

Many people enter into a financial agreement prior to marriage or entering into a de fact relationship in order to protect their assets. This commonly occurs in cases where people are entering into subsequent marriages or relationships. 

Financial agreements entered into before a marriage or de facto relationship or prior to separation can make whatever provision the parties want. However, drafting such agreements is not a simple matter of filling in a form. In order to adequately make provision for what the parties want, and in order to make a future challenge unlikely to succeed, the parties ought to make a full and frank disclosure of their financial circumstances before entering into the financial agreement, and the agreement needs to be drafted with care. 

When the parties are negotiating a financial settlement after separation in the absence of a prior financial agreement, a financial agreement is often used to formalise the final financial settlement that has been agreed upon. Financial agreements entered into after separation can include provision that neither party will seek spousal support or de facto maintenance from one another - something which is not available if Court orders by consent are obtained. In order for the “no spouse maintenance/de facto maintenance” clauses to be effective, neither party must be incapable of supporting themselves without an income tested pension or allowance, having regard to the provisions of the agreement. 

Whatever type of financial agreement is entered into, there are a number of technical requirements that must be fulfilled, including that each party obtain independent legal advice. A Party should not enter into a financial agreement without the advice of an experienced Family Lawyer.

For assistance with Family Law matters, phone Dominic Wilson, Managing Partner of Craddock Murray Neumann, on (02) 82684000. Our senior Family Lawyer is certified by the Law Society of New South Wales as an Accredited Specialist in Family Law.
 
Further information
 
Contact Craddock Murray Neumann Lawyers on (02) 8268 4000 for friendly professional service.
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Often our clients report to us that, following separation, their ex-partner or spouse has spent some, or all, of joint funds, before property settlement has been finalised, or that the other party has disposed of an asset that existed before separation and has used the proceeds for his/her sole benefit.

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Date: Jun 08, 2015

In certain circumstances in the past, a situation could arise where a spouse facing family law property proceedings would file for bankruptcy or be declared bankrupt (the Bankrupt), with the result of becoming a “penniless partner” of a non-bankrupt spouse (the Spouse), whose claim might then be defeated in the Family Court property settlement proceedings. The only salvation for the Spouse was to apply to the Federal Court for annulment of bankruptcy on the grounds of some abuse of process.

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Date: Jan 26, 2012

Parties may also be entitled to a stamp duty exemption if the Court makes Orders requiring a transfer of property.

Inheritances and Gifts in Family Law, how are they treated?
Date: Nov 01, 2011

Consider this example: John and Jill have been married for 10 years and have recently separated. Around 2 years ago Jill’s father died and Jill received an inheritance of $100,000. These monies were deposited into a joint bank account and have been used by the parties to assist in the purchase of a property. Now that the relationship has broken down what becomes of Jill’s inheritance?

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Date: Oct 11, 2011

If you are in dispute with your partner regarding the care arrangements for your child you are required, by law to engage in what is called Alternative Dispute Resolution.

Do I need a pre-nup?
Date: Oct 06, 2011

In Australia couples who are considering living together, as a de facto couple (whether same sex or heterosexual) or are considering marriage have the option of entering into an agreement to protect their assets in the event they separate. This agreement can protect not only assets in existence now, but also assets the parties purchase throughout the relationship.

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Date: Mar 28, 2011

A small minority of family law cases require a decision from the Court, whether it involves parenting or financial issues. Where there is a different version of facts given by each party, one of the tasks of the Judge hearing the case is to make findings of fact. In other words, which version of events does the Judge believe to be the correct version.

Binding Financial Agreements – Handle With Caution
Date: Aug 22, 2010

Under the Family Law Act, parties to a marriage or de facto relationship may enter into a financial agreement to make provision for their financial arrangements during the course of their relationship, and for financial settlement upon the breakdown of their relationship.

Property of the Marriage: What Assets are Available
Date: Nov 15, 2009

Upon the breakdown of a marriage one of the issues that needs to be addressed is a financial settlement. This involves dividing the assets, liabilities and superannuation of the parties whereby each party is allocated their share of the net assets, with the end result that none of the assets and liabilities are held in joint names.

Binding Financial Agreements: when do they cease to be binding?
Date: Oct 08, 2009

The Full Court decision of Black v Black (2008) 38 Fam LR 503 (“Black v Black”) on financial agreements continues to impact on family law decisions being cited in the recent Federal Magistrates Court decision of Fitzpatrick & Griffin [2008] FMCAFAM 555 (“Fitzpatrick & Griffin”).

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