You may enter into a Financial Agreement:
- During cohabitation with your partner;
- Before marriage (pre-nuptial agreement);
- During the marriage; and
- After you are separated.
Entering into a Financial Agreement before or during marriage gives you certainty on how your assets will be divided upon separation.
When you separate from your partner, the property settlement reached between the two of you can be formalised either by way of Consent Orders or a Binding Financial Agreement (“BFA”). The terms of a Consent Order need to be deemed “just and equitable” by the court before they can be approved. There is no such requirement for a BFA, and the courts are prevented from interfering with the agreement reached between parties regardless of how fair or unfair the agreement is.
However, there are strict requirements that need to be complied with in order for a BFA to be valid and enforceable. These requirements are:
(a) The agreement is signed by all parties;
(b) Before signing the agreement, BOTH parties obtained independent legal advice from a lawyer about the effect of the agreement on the rights of that party, and about the advantages and disadvantages of entering into the agreement;
(c) Each party is provided with a signed statement by the lawyer stating that the advice referred to in (b) was provided to that party;
(e) The signed statement is also provided to the other party or the lawyer acting for that party; and
(f) The agreement has not been terminated and has not been set aside by a court.
If the agreement does not comply with the above requirements, it is not enforceable.
A BFA can deal with the property settlement, and financial support or maintenance of a party.
A party may apply to court to set aside a Financial Agreement if:
(a) The agreement was obtained by fraud, such as non-disclosure of a material matter;
(b) A party entered into the agreement for the purpose of defrauding or had reckless disregard of the interests of:
- a creditor of the party; or
- a party to the agreement.
(c) The agreement is void, voidable or unenforceable; or
(d) In the circumstances that have arisen since the agreement was made it is impracticable for the agreement or a part of the agreement to be carried out; or
(e) Since the making of the agreement, a material change in circumstances has occurred (being circumstances relating to the care, welfare and development of a child of the marriage) and as a result of the change, the child (or if the applicant has caring responsibility for the child), a party to the agreement will suffer hardship if the court does not set the agreement aside; or
(f) In respect of the making of a financial agreement, a party to the agreement engaged in conduct that was unconscionable (such as duress); or
(g) A payment flag is operating under Part VIIIB on a superannuation interest covered by the agreement and there is no reasonable likelihood that the operation of the flag will be terminated by a flag lifting agreement under that Part; or
(h) The agreement covers at least one superannuation interest that is an unsplittable interest for the purposes of Part VIIIB.