What Are They
Known in Movies or TV as ‘Prenups’ or ‘Prenuptial agreements’, the documents which intend to set out how each party’s assets are to be divided in the event of separation are recognised under Australian Law as ‘Financial Agreements’.
Financial Agreements are prescribed in the Australian Family Law Act 1975 (Cth) as the only ways, other than a Court Order, by which parties can enter into a binding agreement as to a property settlement. They are, in essence, highly specialised forms of contract to govern Australian Family Law property division or settlement upon the breakdown of a marriage or de facto relationship, much like formal Court Orders.
Unlike Court Orders, however, Financial Agreements are the only way in which married couples or parties in a de facto relationship, but who are not actually separated, can enter into a legally binding agreement as to the division of their property in the event that they subsequently separate.
Highly Specific Requirements
When drafting Financial Agreements, however, especially those made prospectively (that is, before commencing a relationship or during a relationship but before separation), it is critically important that the agreement is prepared to consider as many contingencies as possible so that the agreement is not invalidated merely by changed circumstances rendering the provisions impractical (known in contractual law as ‘frustration’).
There are a number of highly specific requirements in the Family Law Act that are required to be complied with, before a Financial Agreement is determined to be ‘Binding’ on the parties. Where an agreement is not ‘Binding’, it is possible for the agreement to be ‘set aside’ by one of the parties upon application to the Court.
In those circumstances where the agreement is set aside, the agreement may well not be worth the paper it was written on. Moreover, the ensuing costly legal battle over the agreement’s effectiveness means that it may have been better to never have entered into the agreement in the first place!
Types of Agreement
Married Couples are able to enter into 4 different types of agreement:
- Before marriage (section 90B of the Act)
- During marriage but before separation (section 90C of the Act);
- During marriage but after separation (section 90C of the Act); and
- After divorce (section 90D of the Act).
De Facto Couples are able to enter into 3 different types of agreement:
- Before a de facto relationship commences (section 90UB of the Act)
- During a de facto relationship (section 90UC of the Act); and
- After a de facto relationship ends (section 90UD of the Act).
Financial Agreements can indeed be Binding
The Full Court of the Family Court of Australia has held that parties entering into a financial agreement ‘can literally make the worst bargain possible, but still be bound by it’ – Hoult  FamCAFC 109.
Justices Strickland and Ainslie-Wallace in Hoult said that the point of the Family Law legislation is to ‘allow the parties to decide what bargain they will strike‘, and provided the agreement complies with the requirements of the Act, they are ‘bound by what they agree upon‘.
Whilst there are many misconceptions about Financial Agreements and their effectiveness, one of the main ones being that ‘Prenups aren’t worth the paper they’re written on’, this could not be further from the truth. Financial Agreements are the only way, in Australian Law, by which parties who have not yet separated, are able to determine how their property is to be divided following separation (if the relationship breaks down).
Ensure you have proper advice
It is therefore critically important that before signing any Financial Agreement, you secure comprehensive legal advice from an experienced Australian Family Law practitioner.
The failure to secure comprehensive advice and just ‘having a lawyer sign the document’ may mean that you are bound by literally the ‘worst bargain possible’ and are unable to apply to the Courts for a determination of a just and equitable settlement which would have otherwise been available had you not signed the agreement.
At JosephDavid Lawyers, we are highly experienced in drafting, reviewing, negotiating and advising as to Financial Agreements. We are experts in Family Law, particularly in property disputes and settlements.
Do I need one?
Having an effective Financial Agreement is like having a Will – once you’ve set one up, you can forget about it until you need to rely on it. Importantly, for couples in a married or de facto relationship or contemplating entering into a relationship, preserving your pre-existing assets, savings, superannuation or inheritances received through your family is a very prudent decision.
The alternative could very well be a lengthy, expensive, stressful and emotionally draining experience of Family Law litigation. In many cases of second or subsequent relationships, having a fair Financial Agreement negotiated and duly executed allows the couples involved the freedom to focus on their relationship without the worries of possible financial fall-out if the relationship were to fail.
Transparent, Fixed Fees
We charge a Fixed Fee for the Independent Legal Advice, Review and Certification of Financial Agreements drafted by other lawyers (where there are no changes or amendments that are required), of $1,100.00 incl GST. This one-off fee includes the review of the draft agreement, a letter of advice and in-person conference upon you to provide the advice, as required by the Family Law Act, due execution of the agreement and exchange with the other party’s lawyers. Where we are engaged to draft the Financial Agreement on your behalf, we provide those services, again at Fixed Prices, as follows:
- $3,300.00 incl GST for agreements without superannuation splitting provisions;
- $4,400.00 incl GST for agreements with superannuation splitting from one party to the other; and
- $5,500.00 incl GST for agreements made prospectively (before the relationship commences or during the relationship, before a split)
Your partner would then need to secure independent legal advice from a lawyer of their own choosing before they could sign off on the agreement. This is a requirement under the Family Law Act to ensure that the Agreement is indeed Binding. We can make a referral for other lawyers for their convenience.
Find out More
As you will appreciate by now, drafting Financial Agreements is a highly specialised area of the law, specific to Family Law. JosephDavid Lawyers are experts in Family Law Property division matters and drafting Financial Agreements that are effective, fair, and Binding. Read through our Articles to learn more about our expertise in the area of drafting effective, Binding Financial Agreements and Family Law in general. Contact Us Now for Free to see how we can help assist in drafting or reviewing your Financial Agreement.