What is a Binding Financial Agreement?
The Pros and Cons of Binding Financial AgreeentsWhat is the effect?When can they be set aside?
Effect of the AgreementUnder a Binding Financial Agreement the parties contract out of the provisions of the Family Law Act, which would otherwise determine the division of the asset pool in the event of the breakdown of a relationship. This would include property, superannuation entitlements and entitlements to spousal maintenance.
Purpose of the AgreementThe purpose of the Agreement is : • Mutual quarantine of assets – to enable both parties for the future benefit of children of a previous marriage or relationship (or other intended beneficiary) to preserve certain assets of theirs from future claim by the other and limit the agreement to such property; OR
• Unilateral quarantine – to enable one party for the future benefit of children of a previous marriage or relationship (or other intended beneficiary) to preserve from future claim by the other party certain assets and limit the agreement to that purpose; OR
• Release of spousal maintenance (after separation) for the agreement to be a mutual release from future maintenance in exchange for a property settlement.
When can a binding financial agreement be entered into? Binding financial agreements may be entered into by married or de facto couples. For married people, they can be entered into before marriage, during marriage or after divorce. For de facto couples they can be entered into before entering into a de facto relationship, during a de facto relationship or after the ending of a de facto relationship. It is important to note that an agreement entered into before marriage must be made in anticipation of marriage otherwise the agreement has no effect. It is also important to note that an agreement entered into whilst in a de facto relationship automatically terminates upon marriage.
Setting aside binding financial agreementsThe Family Court is able to set aside binding financial agreements in certain circumstances.
These include:1. The agreement was obtained by fraud (e.g. non-disclosure of a material matter); or
2. The agreement is void, voidable or unenforceable (e.g. the binding requirements were not fulfilled); or
3. Circumstances have arisen since the agreement was made that make it impracticable for the agreement or part of the agreement to be carried out; or
4. Since the agreement was made, a material change in circumstances that relate to the care, welfare and development of a child of the relationship has occurred. As a result of the change, the child, or a party to the agreement will suffer hardship if the court does not set the agreement aside; or
5. A party to the agreement engaged in unconscionable conduct in the process of developing the financial agreement (e.g. signing the agreement on the parties' wedding day).
The above grounds are detailed in Sections 90K and 90UM of the Family Law Act.
***Disclaimer***This article is for general information purposes only and does not constitute legal advice or any other professional advice.
If you need help to understand the effect and the advantages and disadvantages of a Binding Financial Agreement, book a consultation.
If you want a fast and affordable option to formalise your agreement, don't wait. Contact our office now for an obligation free quote.
Purpose of the AgreementThe purpose of the Agreement is : • Mutual quarantine of assets – to enable both parties for the future benefit of children of a previous marriage or relationship (or other intended beneficiary) to preserve certain assets of theirs from future claim by the other and limit the agreement to such property; OR
• Unilateral quarantine – to enable one party for the future benefit of children of a previous marriage or relationship (or other intended beneficiary) to preserve from future claim by the other party certain assets and limit the agreement to that purpose; OR
• Release of spousal maintenance (after separation) for the agreement to be a mutual release from future maintenance in exchange for a property settlement.
When can a binding financial agreement be entered into? Binding financial agreements may be entered into by married or de facto couples. For married people, they can be entered into before marriage, during marriage or after divorce. For de facto couples they can be entered into before entering into a de facto relationship, during a de facto relationship or after the ending of a de facto relationship. It is important to note that an agreement entered into before marriage must be made in anticipation of marriage otherwise the agreement has no effect. It is also important to note that an agreement entered into whilst in a de facto relationship automatically terminates upon marriage.
Setting aside binding financial agreementsThe Family Court is able to set aside binding financial agreements in certain circumstances.
These include:1. The agreement was obtained by fraud (e.g. non-disclosure of a material matter); or
2. The agreement is void, voidable or unenforceable (e.g. the binding requirements were not fulfilled); or
3. Circumstances have arisen since the agreement was made that make it impracticable for the agreement or part of the agreement to be carried out; or
4. Since the agreement was made, a material change in circumstances that relate to the care, welfare and development of a child of the relationship has occurred. As a result of the change, the child, or a party to the agreement will suffer hardship if the court does not set the agreement aside; or
5. A party to the agreement engaged in unconscionable conduct in the process of developing the financial agreement (e.g. signing the agreement on the parties' wedding day).
The above grounds are detailed in Sections 90K and 90UM of the Family Law Act.
***Disclaimer***This article is for general information purposes only and does not constitute legal advice or any other professional advice.
If you need help to understand the effect and the advantages and disadvantages of a Binding Financial Agreement, book a consultation.
If you want a fast and affordable option to formalise your agreement, don't wait. Contact our office now for an obligation free quote.
WHERE TO START
We can help you! Book in for a free 15 minute strategy call with our solicitor Kerstin.
More Free Resources
Helpful resources and information in Family Law, Divorce, Parenting Matters, Child Support, Domestic Violence, Legal Aid and other useful links.