A Binding Financial Agreement (AKA a financial agreement) is a contract that two people can enter into which specifies how they will divide their assets upon the breakdown of their relationship.
A financial agreement can be made before marriage, during marriage, and after divorce.
De facto couples can also make financial agreements.
Once entered into, a financial agreement operates as an enforceable contract. It also stops the Court from hearing property settlement applications while the agreement is in place.
Financial agreements can be an effective way to protect assets (as a ‘pre-nuptial agreement’) or finalise a financial relationship after separation.
While the Family Law governs financial agreements and the Court has the jurisdiction to enforce and set aside illegal agreements, the Court has no involvement in the making of agreements. For this reason, financial agreements can provide the parties with more privacy and control than other methods of finalising a financial relationship.
There are two main down sides to making a financial agreement.
The first is that they can be time consuming and expensive to produce. This is because there are very strict procedural requirements the must be met to create a financial agreement.
The second is that financial agreements are not suitable for every person’s situation. Depending on the circumstances that the financial agreement was entered in to, the Court has been more willing to set aside agreements (tear the agreement up).
If you would like to find out more about financial agreements and whether one might be suitable for you, contact one of our lawyers for a consultation.
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