Binding Financial Agreements
Binding Financial Agreements first saw the light of day on 27 December 2000 when they became part of the Family Law Act 1975. These agreements, provided they have been validly executed essentially oust the normal jurisdiction of the Family Court in relation to all property and financial matters. Although these agreements may be varied this is not often done. The ability to set them aside is very restrictive and may significantly disadvantage one of the parties to the agreement.
A binding financial agreement may be made before, during or after marriage (but within 12 months of obtaining a divorce). The courts can make orders to enforce a binding financial agreement. There are a number of formal requirements which have to be met and if these are not then it is unenforceable. Essentially these agreements deal with the combined matrimonial pool of assets including all property or financial resources which either or both parties have brought to or accumulated during the marriage which will be dealt with including maintenance following a marital breakdown.
When the court makes orders adjusting property interest it has to be satisfied that what is being proposed is just and equitable. For spousal maintenance the court makes orders which it considers proper in the circumstances. Importantly there are no such requirements when entering into a Binding Financial Agreement apart from the formal requirements which, if not satisfied entitles the court to set aside the agreement.
A financial agreement is only binding on the parties if:
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The agreement is signed by both parties;
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The agreement contains, in relation to each party to the agreement a statement to the effect that the party to whom the statement relates has been provided, before the agreement was signed by him/her, a certified annexure to the agreement, with independent legal advice from a legal practitioner as to the following matters:
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the effect of the agreement on the rights of that party;
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the advantages and disadvantages, at the time the advice was provided, to the party making the agreement.
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The annexure to the agreement contains a certificate signed by the person providing the independent legal advice stating that the advice was provided;
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The agreement has not been terminated and has not been set aside by a court;
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After the agreement is signed, the original agreement is given to one of the parties and a copy is given to the other.
The certification required by the Act is onerous and many lawyers decline to provide it. Significant expertise is required by the lawyer to satisfy his/her duty under the Act and neither this nor the time expended comes cheaply. All advice given to clients executing binding financial agreements should be in writing. Clients need to make full disclosure of all of their assets and resources. Not only should the agreement be properly explained to them but it should be fair and reasonable. If it is not clients should be advised of this together with the grounds on which the court can set it aside. It is best that Binding Financial Agreements not be used to finalise affairs of separated couples particularly where there are children as there are certain exposures.
There is a common misconception amongst the public that Binding Financial Agreements are straightforward, do not require much expertise and are cheap to obtain, which is far from reality. It is essential that clients disclose any and all assets which they own to each other before executing the agreement otherwise the court can set it aside. Each party to the agreement needs to retain their own legal representative to avoid any conflict of interest as the consequences for either party can be very different. Agreements are normally set aside for inadequate disclosure or duress. A Binding Financial Agreement continues to operate despite the death of a party and operates in favour of and binds their personal representative. It can only be terminated by the parties by entering into a termination agreement and observing the proper formalities.
The major benefits of these agreements are certainty, to protect assets including financial resources and avoid costly litigation following a relationship breakdown.
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Binding Financial Agreements Articles
De Facto Relationships, A New South Wales and Victorian Perspective
Date: December 31, 2008
Author(s): Frank Egan B.A., LL.B., A.C.L.A., F.T.I.A. (Notary)
Originally de facto relationships in NSW were governed by the De Facto Relationships Act which was replaced in June 1999. The term “de facto relationship” has been significantly widened to cover all relationships between two adults over the age of 18 years who live together, are not married and who are not related to each other. This definition now covers gay couples providing them with a level of protection which had not existed previously.
Family & De Facto Law - Changes in De Facto Law and its effects on Property
Date: March 07, 2009
Author(s): LAC Lawyers
In legal terms, a de facto relationship is essentially a relationship between two individuals who are not married and who live together as a couple on a ‘genuine domestic basis’.
Family Law - Assets - disputes
Date: August 04, 2009
Author(s): LAC Lawyers
Australasian family law cases concerning a party’s initial contributions, or separate property, brought into the relationship appear far from clear when settlement is litigated in court.
Family Law - Binding Financial Agreements Under the Family Law Act 1975 (Cth)
Date: June 15, 2010
Author(s): Carol Grimshaw LL.M., B. Legal Studies, Adv. Dip. Bus.
If you’ve recently entered a new relationship, have been in a new relationship for a time, or are considering ending your relationship, you should consult a lawyer to learn your rights and obligations under the Family Law Act 1975 (Cth) (‘the Act’).
Family Law - Can A Marriage Registered Overseas (Asia) Be Dissolved In Australia
Date: March 15, 2010
Author(s): Pheba Netto LL.B. (Hons)
There are many Malaysians who have now made Australia their home. Some come here to study, some to relocate with their families and some come here as a result of breakdown of marriage. When there is a marital breakdown, people sometimes leave their home country without finalising their divorce or custody matters. What then can they do now that they are here in Australia?
Family Law - De Facto Spousal Maintenance
Date: August 17, 2009
Author(s): LAC Lawyers
A recent development in de facto family law has seen an expansion of the eligibility of parties in Australia to spousal maintenance. Pursuant to the Family Law Amendment (De Facto Financial Matters and other measures) Act 2008 (Cth), a person of a de facto relationship that separated on or from 1 March 2009 may be entitled to receive spousal maintenance.
Family Law - Marriage Separation or the break down of a long term de facto relationship is always difficult. At LAC Lawyers we can guide you through the legal process
Date: May 19, 2009
Author(s): LAC Lawyers
Separation is a major step for everyone. It's a time when you need help and information. Most people admit feeling the worst they have ever felt in their life. Should you and your partner decide to separate, it is vital that certain immediate decisions will need to be made in relation to the children and your finances. It is at this stage that you should seek legal advice about your situation, and here at LAC Lawyers, our experienced solicitors can guide you through this sometimes traumatic and cumbersome process, as painlessly as possible!
Family Law - Pre-Nuptial or Co-habitation Agreements
Date: January 22, 2009
Author(s): LAC Lawyers
We are increasingly being asked to prepare financial agreements for couples who are about to “take the plunge” or “walk down the aisle”. However, financial agreements are also available for couples who are living together whether or not they are married, and for couples who have separated.
Family law - Spousal relationships - What's the law got to do with it?
Date: June 15, 2010
Author(s): Carol Grimshaw LL.M., B. Legal Studies, Adv. Dip. Bus.
Whether your new spousal relationship is a married, de facto or same sex relationship; at the beginning, consideration of the law is the last thing on your mind.
Property Law - Family Law - The concept of joint land ownership when family relationships break down.
Date: May 17, 2010
Author(s): Michael Pickering B.A., LL.B. (Hons.), LL.M., M. A.
Joint land owners hold land either as joint tenants or as tenants in common. Joint tenancy is far more common. Through this method of ownership, the interests of one spouse or partner are deemed by law to flow automatically to the surviving spouse or partner irrespective of whether the deceased spouse or partner has left a will or other testamentary document.
What to expect when you call LAC Lawyers
Date: December 13, 2006
Author(s): LAC Lawyers
LAC Lawyers is a full service firm dedicated to the provision of superior legal services in Australia. Our aim is to provide unrivalled client satisfaction coupled with high quality service and advice. When you call LAC Lawyers our friendly reception staff will spend time with you to identify the area of law your enquiry relates to then pass you on to one of our qualified solicitor's who can help you.