Binding Financial Agreement: Why Couples Need It To Safeguard Finances

Anyone entering into a marriage or de facto relationship in Australia may wish to draw up a legal agreement detailing how property and financial resources will be divided in the event of a divorce or relationship breakdown. This is referred to as a binding financial agreement in Australia although many refer to it as a separation agreement or a pre- or post-nuptial agreement. No matter what this agreement is called, as long as it is valid and enforceable, the court may use it to divide assets according to the wishes of the parties involved. What are the benefits of having an agreement of this type?

When you establish a binding financial agreement, you remain in control of your assets and decide which party gets which items. The emotional and financial costs of the legal proceedings are greatly reduced and you can begin to move forward with your new life. Communication between former partners improves with the use of a financial agreement and your relationship as parents, if this situation applies, often works better. The best time to come to a financial agreement is when you are still acting as a couple so you can make rational decisions. Emotions are less likely to come into play when this is the case.

How do you go about setting up a binding financial agreement in Australia? Certain conditions must be met to ensure the contract is valid and enforceable. Both parties must seek independent legal advice from different legal practitioners before the agreement is signed. The legal practitioners are required to explain how entering into the agreement will affect the right of each party and outline the advantages and disadvantages of an agreement of this type. A signed statement must be provided by the legal practitioner stating that the advice was given and this statement must be shared with the legal advisor for the other party. In addition, any spousal maintenance to be provided must be laid out in the document. The financial agreement in Australia must be written and signed by both parties.

Certain situations will make a binding financial agreement in Australia invalid and unenforceable. Fraud is one situation. If either party has failed to disclose a 'material matter', the contract can be set aside by the court. The same is true if the agreement has been entered into for a fraudulent purpose. If there is a material change in circumstances, the court may set the contract aside and the same is true if some terms are voidable, void or unenforceable. Other situations may occur that make the contract invalid.

Never enter into a binding financial agreement without following these steps. When you do so, the court will likely set the agreement aside as if it never existed. Work with legal council to have an agreement drafted. When you do so, you can save yourself a great deal of time and frustration in the event the relationship does not last.

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