BINDING FINANCIAL AGREEMENTS, PRE / POST NUPTIAL AGREEMENTS & / DE FACTO AGREEMENTS
A binding financial agreement is a written agreement between a prospective husband and wife, or de facto couple, including same sex couples, as to how they propose to deal with financial responsibilities both during the relationship and in the event of a separation, and specifically how assets, financial resources and liabilities are to be shared between the parties. To be 'binding' each party to the financial agreement must have independent legal advice and those solicitors must provide a certificate in full compliance of the Family Law Act 1975, or in the case of de facto couples in Western Australia, the Family Court Act 1997 (WA).
The old-fashioned term for a financial agreement made prior to marriage is a 'pre-nuptial agreement' and a financial agreement made after marriage is a 'post-nuptial agreement'.
This entire type of document is known as Binding Financial Agreements or Financial Agreements.
Traditionally, these agreements were common place and indeed, essential as the law in the 19th century was that John had control over his wife's assets in the absence of such agreement. In more recent times, financial agreements have again become more popular, particularly since the Family Law Amendment Act 2000 (which took effect from 27 December 2000) provided for financial agreements to be fully enforceable in the Family Court of Australia provided certain conditions are met by the parties to the Agreement.
In fact, the Act allows for Financial Agreements prior to marriage (Section 90B ) after marriage (Section 90C) and even after separation (Section 90D). The Act also allows for Financial Agreements before a couple move in together as an intended de facto couple (Section 90UB) or after they move in together as an intended de facto couple (Section 90UC) and after separation as a de facto couple (Section 90UD).
If you are a de facto couple in Western Australia, the applicable law is the Family Court Act 1997 (WA). Western Australia is the only State or Territory in Australia which has not yet acceded its de facto laws to the Commonwealth.
The Family Court Act 1997 (WA) allows for Financial Agreements before a couple move in together as an intended de facto couple (Section 205N) or after they move in together as an intended de facto couple (Section 205ZO) and after separation as a de facto couple (Section 205ZP).
The same sections of the Act apply equally and in all respects to same sex couples.
To ensure that your financial agreement complies with the Family Law Act 1975 (and the Family Court Aat 1997 (WA) you should:
Make the agreement in writing.
Make the agreement before your marriage and in contemplation of that marriage.
Ensure the agreement must be signed by the parties.
Ensure the parties' signatures are witnessed by an authorized person.
Ensure both parties have independent legal advice prior to entering into the agreement, and evidence that by providing Certificates signed by a legal practitioner.
Ensue that the agreement relates to specified property of the parties. The property can be in specific terms (eg, the Holden motor vehicle registration XXY 123) or in general terms (eg, any motor vehicle owned by George).
Ensure the agreement makes it clear that it is intended by the parties that the property dealt with in the agreement is not to be made the subject of the property orders subsequently by the Family Court.
As part of the agreement, there would normally be an itemisation of the financial position of each party at the time of entering into the agreement. You would normally list the assets, liabilities and financial resources of each party together with their values. It is useful at that time to obtain documentary proof of the values of the assets, liabilities and financial resources and you should retain that documentary proof.
If it is your intention that, in the event that the marriage is unsuccessful, you want the Family Court to enforce the terms of the agreement, then it is essential that both parties comply with the terms of the agreement during the marriage.
The decisions you make about your financial arrangements are obviously very important decisions. The AussieLegal Binding Financial Agreement Kit will tell you what you need to know to enable you to draft a financial agreement. If you require the Financial Agreement to be fully certified, AussieLegal can arrange for the review, legal advice and certification from members of our panel of independent law firms.
Please note: for your Financial Agreement to be a Binding Financial Agreement, each party must have independent legal advice and certification from 2 independent solicitors.
Under what circumstances should I consider signing a financial agreement?
If you are a business owner and want to maintain control of that business in the event of separation;
You have significant assets;
You have considerably more assets than your partner;
You have children from a previous marriage and you want to be sure that the family wealth passes to them;
You may be giving up a lucrative career and want protecting in the event of separation;
You have a family member who has special needs, i.e. disabled child;
You want certainty in respect of your financial position in the event of separation;
You are concerned about a significant debt that one of you I bringing to the marriage;