Financial Agreements

A Financial Agreement is a private contract between you and your either soon to be, current or former partner or spouse. They are also known as ‘Pre-nup’ or ‘Continuing Relationship’ or ‘Post-nup’ agreements.

Financial Agreements Explained

Financial agreements enable you and your partner / spouse to mutually contract out of the right to bring a claim against each other in the Federal Circuit and Family Court of Australia (the Court), in relation to all financial matters to which the financial agreement applies, in the event you and your partner / spouse separate.

Given that financial agreements take away the power of the Court to make orders, there are very strict legal requirements under the Family Law Act 1975 (Cth) (the Act) that must be met when entering into one. To help you understand financial agreements and determine if one might be right for you, we have listed below some frequently asked questions.

What are the different types of financial agreements?

You can enter into a financial agreement in the following circumstances:

  1. Prior to the commencement of a de facto relationship or marriage;
  2. During a de facto relationship or marriage; or
  3. Following separation or divorce.  

Financial agreements can address all financial matters of the couple, or be more limited in scope, such as just excluding claims in relation to inherited assets only. This is known as an Inheritance Protection Agreement.

Why have a financial agreement?

Common reasons people enter into financial agreements before or during a relationship include:

  1. To protect assets accumulated prior to the relationship. This is particularly relevant to second relationships and where someone wants to protect assets for their children from a former relationship.
  2. To protect current and future inheritances, monetary gifts and family wealth from claim by the other person.
  3. To provide certainty about a couple’s financial arrangements in the event of separation in the future.  This can reduce the cost and stress associated with negotiating or litigating financial matters at separation. 
  4. To gain more control over the outcome at separation because if the financial agreement is binding the Court does not have power to make orders for a property settlement or the payment of spousal maintenance. 

What are the technical requirements of a financial agreement?

The Act specifies that in order for a financial agreement to be binding:

  1. It must be signed by both parties;
  2. Before signing the agreement, both parties were each provided with independent legal advice from an Australian legal practitioner about the effect of the agreement on the parties’ rights and about the advantages and disadvantages, at the time the advice was provided, of making the agreement;
  3. Before or after the agreement is signed, both parties were provided with a signed statement by the legal practitioner stating that the advice (set out in paragraph 2 above) was provided to each party (whether or not the statement is annexed to the agreement);
  4. A copy of the signed statements must be given to each party or their legal practitioner; and
  5. The agreement has not been terminated or set aside by the Court.

In relation to spousal maintenance, the agreement must provide:

  1. The party for who maintenance provision is made; and
  2. The amount provided for that party’s maintenance.

There are certain circumstances where, even if the above procedural requirements are not strictly satisfied, the Court has the power to find that the agreement is binding if it is satisfied that it would be unjust and inequitable if the agreement was not binding.

When does a financial agreement become binding and when does it come into effect?

There is a distinction between when the financial agreement becomes binding versus when it comes into effect. The financial agreement is binding from the date that it is signed by the parties and their legal practitioners. It does not come into effect unless the parties separate and upon the signing of a Separation Declaration.

In relation to spousal maintenance, the Court may still have the power to make an order for maintenance if it is satisfied that, when the Agreement came into effect the circumstances of a party were such that, taking into account the terms and effect of the agreement, that person was unable to support themselves without an income tested pension, allowance or benefit. 

When does a financial agreement end?

A financial agreement can only come to an end if:

  1. the parties enter into another financial agreement that states the previous agreement is terminated;
  2. if the parties enter into a Termination Agreement; or
  3. the agreement is set aside by the Court.

A financial agreement, once signed, will be considered binding. To set aside such an agreement is a difficult and costly process. The question as to whether an agreement is valid, enforceable or effective is determined by the Court. 

How Moores can help

At Moores, we prepare financial agreements as well as inheritance protection agreements for all types of relationships. The law in relation to financial agreements is complex. They must be drafted in accordance with the legal requirements under the Act and each agreement needs to be carefully tailored to the circumstances of the relationship. 

We recognise that negotiating pre nuptial and continuing relationship agreements requires sensitivity and approach the process with care, respecting our client’s ongoing relationship with their partner / spouse.

Contact us for more detailed and tailored help or get started with the Moores Family Law online assistant. The service is confidential and free, you’ll get valuable feedback and a personalised separation plan.