A Financial Agreement is a legally binding “contract”  that sets out how assets will be divided between a couple in the event of separation. The Family Law Act 1975 (Cth) (“Act”) enables couples to enter into Financial Agreements before marriage, during marriage or after separation. 

There are three (3) types of Financial Agreements, being as follows:

1. An agreement made prior to marriage that outlines how property and financial resources will be divided between a couple in the event of separation.  This type of agreement is commonly referred to as a prenuptial agreement.
2. An agreement made during a marriage that outlines how property and financial resources will be divided between a married couple in the event of separation. This type of agreement is commonly referred to as a postnuptial agreement.
3. An agreement made after a Divorce Order is made to formalise the agreement reached between the parties as to the division of their property and financial resources accumulated during the marriage. 

If a couple does not enter into a Financial Agreement before or during their marriage, there is the option of entering into a Financial Agreement following separation to formalise the agreement reached between the parties as to the division of their property and financial resources.  This pathway avoids litigation.  It is important you seek legal advice as to whether this option is appropriate for your personal circumstances. 

What does a Financial Agreement include?

A Financial Agreement details how your assets are divided, including the sale or transfer of real property and superannuation splits.  It can also include provisions with respect to spousal maintenance.

Pursuant to Section 90G of the Act, for a Financial Agreement to be binding, the following must occur:

1.    The Agreement is signed by all parties.

2.    Before signing the Agreement, each party must have received independent legal advice from a legal practitioner about:

a.   The effect of the Agreement on their legal rights;

b.   The advantages and disadvantages of entering into the Agreement.

3.    Either before or after signing the Agreement, each party must have been provided with a signed statement by the legal practitioner stating that the advice was provided.

4.    A copy of the statement referred to at item 3 above is provided to the other party, or to the legal practitioner acting for the other party.

5.    The Agreement has not been terminated and has not been set aside by the Family Courts.

Should I have a Financial Agreement?

Having a Financial Agreement in place can mean that you and your former partner are clear as to how property and financial resources will be divided in the event of separation.  It provides a level of certainty to each party that his or her specific assets are protected in the event of separation.

In some amicable separations, it may be appropriate to enter into a Financial Agreement to formalise an agreement reached between parties, as opposed to making an application to the Family Courts. 

It is important to obtain advice from a legal practitioner as to your personal circumstances and whether entering into a Financial Agreement is right for you.

The information in this blog does not constitute legal advice and cannot be relied upon by you.  If you require advice specific to your situation, please contact Sayer Jones.  The contents of this blog are relevant as at July 2021.  We recommend you obtain specific advice relevant to you and your family’s situation.