In Australia, financial agreements between parties to a relationship are made pursuant to the Family Law Act. They can be entered into prior, during or after marriage and similarly prior, during or after the end of a de-facto relationship. Such agreements set out how your property will be divided if your relationship comes to an end. The agreement will determine how your property will be divided and aims to prevent the Courts from being involved. The agreement can also cover cash, investments, superannuation and pension entitlements and stipulate who is responsible for shared liabilities and debts. A financial agreement can also take account of future considerations such as how childcare impacts the division of income and assets.
Requirements
Financial agreements are not binding unless the requirements of the Family Law Act are met. One of these requirements is that both parties receive independent legal advice. What this means is, if you are considering a financial agreement with your partner, you should ensure that you meet with a lawyer who is experienced in preparing and reviewing these types of financial agreements. The lawyer must provide you with advice in relation to your rights, the respective advantages and disadvantages of the agreement, and whether the provisions of the proposed agreement are fair and equitable. All parties, including the parties’ lawyers, must sign the agreement to ensure it is valid.
It is important to note that no other form of document (except for an order of the Court), is effective in determining a property division after separation. Any agreement made which does not comply with the terms of the Family Law Act may be overturned by the Court at a later date.
Another important advantage of Financial Agreements is that a transfer of real property made pursuant to such an agreement is generally exempt from transfer duty. This alone will often cover the cost of engaging a lawyer to prepare such an agreement.
Who should use a financial agreement?
All couples should plan their financial future together, including having a plan for the end of a relationship. There are also instances when it is highly recommended to have a financial agreement in order to protect the parties involved. When one spouse has a significantly larger net worth than the other spouse, it is sensible to safeguard that wealth. An agreement l may also protect a family business that might otherwise be forced to liquidate in the event of a relationship breakdown.
The benefits of a financial agreement
A financial agreement brings certainty, finality, and security. There is greater privacy in a financial agreement, as compared to Court proceedings, as a financial agreement is negotiated between the parties. It may not be the most romantic notion, but it certainly will save a lot of time, money and hassle in the event of a relationship breakdown and in that sense, the benefits far outweigh not having an agreement drawn up.
Here at Geldard Sherrington Lawyers, we are experts in Family Law and can offer guidance and advice about having a financial agreement drawn up. If you’d like to speak further with one of our family lawyers, give us a call on 07 41 94 5422. Or, contact us online here.