Havilah Legal presents a slideshow on the various advantages and disadvantages of entering into a Binding Financial Agreement.

1.
Pros​ ​and​ ​Cons​ ​of​ ​Getting​ ​a​ ​Binding​ ​Financial​ ​Agreement ​ ​​ ​​ ​​ ​1
Pros​ ​and​ ​Cons​ ​of​ ​Getting​ ​a​ ​Binding​ ​Financial
Agreement
What​ ​is​ ​a​ ​Binding​ ​Financial​ ​Agreement?
The​ ​Family​ ​Law​ ​Act​ ​1975​ ​(Cth)​ ​(​Family​ ​Law​ ​Act​)​ ​provides​ ​for​ ​parties​ ​to​ ​a​ ​marriage​ ​or​ ​de​ ​facto
relationship​ ​to​ ​enter​ ​into​ ​a​ ​​binding​ ​legal​ ​agreement​ ​​about​ ​the​ ​financial​ ​arrangements​ ​should​ ​their
marriage​ ​or​ ​de​ ​facto​ ​relationship​ ​breakdown.​ ​Such​ ​an​ ​agreement​ ​is​ ​simply​ ​a​ ​contract​ ​between​ ​a​ ​couple
setting​ ​out​ ​their​ ​agreement​ ​for​ ​financial​ ​separation​ ​in​ ​the​ ​event​ ​of​ ​a​ ​breakdown​ ​of​ ​their​ ​marriage​ ​or​ ​de
facto​ ​relationship.
In​ ​Western​ ​Australia​ ​Part​ ​VIIIA​ ​of​ ​the​ ​Family​ ​Law​ ​Act​ ​deals​ ​with​ ​financial​ ​agreements​ ​for​ ​married
couples,​ ​and​ ​Part​ ​5A​ ​Division​ ​3​ ​of​ ​the​ ​Family​ ​Court​ ​Act​ ​1997​ ​(WA)​ ​deals​ ​with​ ​financial​ ​agreements​ ​for​ ​de
facto​ ​couples.​ ​​ ​Part​ ​VIIIAB​ ​Division​ ​4​ ​of​ ​the​ ​Family​ ​Law​ ​Act​ ​1975​ ​contains​ ​similar​ ​provisions​ ​for​ ​de​ ​facto
couples​ ​in​ ​other​ ​States​ ​and​ ​Territories.
A​ ​couple​ ​can​ ​make​ ​a​ ​financial​ ​agreement​ ​before,​ ​during​ ​or​ ​after​ ​a​ ​marriage​ ​or​ ​de​ ​facto​ ​relationship.​ ​Such
agreements​ ​can​ ​cover:
● the​ ​division​ ​of​ ​property​ ​and​ ​finances​ ​(including​ ​superannuation​ ​entitlements)​ ​after​ ​the
breakdown​ ​of​ ​a​ ​marriage​ ​or​ ​a​ ​de​ ​facto​ ​relationship;
● financial​ ​support​ ​or​ ​maintenance​ ​of​ ​one​ ​party​ ​by​ ​the​ ​other​ ​after​ ​the​ ​breakdown​ ​of​ ​a​ ​marriage​ ​or​ ​a
de​ ​facto​ ​relationship;​ ​and
● any​ ​incidental​ ​issues.
For​ ​a​ ​financial​ ​agreement​ ​to​ ​be​ ​legally​ ​binding,​ ​it​ ​must​ ​be​ ​signed​ ​by​ ​both​ ​parties​ ​and​ ​each​ ​of​ ​them​ ​must
have​ ​received​ ​independent​ ​legal​ ​advice​ ​from​ ​a​ ​lawyer​ ​before​ ​signing​ ​on​ ​the​ ​effect​ ​of​ ​the​ ​agreement​ ​and​ ​its
advantages​ ​and​ ​disadvantages​ ​to​ ​the​ ​party​ ​at​ ​the​ ​time.​ ​In​ ​addition,​ ​the​ ​agreement​ ​should​ ​attach​ ​a
certificate​ ​signed​ ​by​ ​the​ ​lawyers​ ​providing​ ​the​ ​independent​ ​legal​ ​advice​ ​stating​ ​that​ ​independent​ ​legal
advice​ ​was​ ​provided​ ​to​ ​that​ ​party.
What​ ​are​ ​the​ ​Advantages​ ​of​ ​a​ ​Binding​ ​Financial​ ​Agreement?
There​ ​are​ ​many​ ​reasons​ ​why​ ​a​ ​couple​ ​would​ ​want​ ​to​ ​enter​ ​into​ ​a​ ​financial​ ​agreement,​ ​but​ ​most
commonly,​ ​the​ ​parties​ ​want​ ​to​ ​protect​ ​property​ ​that​ ​they​ ​owned​ ​before​ ​the​ ​relationship​ ​began,​ ​including
business​ ​assets,​ ​gifts​ ​or​ ​inherited​ ​property​ ​and​ ​by​ ​recording​ ​it​ ​as​ ​such.​ ​In​ ​this​ ​way,​ ​they​ ​can​ ​distinguish
between​ ​personal​ ​and​ ​jointly​ ​owned​ ​assets.​ ​They​ ​may​ ​also​ ​want​ ​to​ ​identify​ ​and​ ​protect​ ​income​ ​or​ ​assets
that​ ​they​ ​may​ ​receive​ ​through​ ​future​ ​inheritances​ ​or​ ​via​ ​a​ ​trust​ ​or​ ​even​ ​to​ ​assign​ ​debt,​ ​such​ ​as​ ​business
loans​ ​or​ ​mortgages,​ ​to​ ​the​ ​appropriate​ ​party​ ​to​ ​avoid​ ​both​ ​sharing​ ​debt​ ​liability.
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2.
Pros​ ​and​ ​Cons​ ​of​ ​Getting​ ​a​ ​Binding​ ​Financial​ ​Agreement ​ ​​ ​​ ​​ ​2
Financial​ ​agreements​ ​are​ ​also​ ​not​ ​uncommon​ ​in​ ​circumstances​ ​where​ ​one​ ​or​ ​both​ ​of​ ​the​ ​parties​ ​have
been​ ​previously​ ​divorced​ ​or​ ​separated​ ​or​ ​if​ ​they​ ​have​ ​children​ ​from​ ​a​ ​previous​ ​relationship​ ​and​ ​they​ ​want
to​ ​protect​ ​their​ ​assets​ ​to​ ​ensure​ ​that​ ​they​ ​are​ ​inherited​ ​by​ ​their​ ​children​ ​after​ ​their​ ​death.
The​ ​parties​ ​may​ ​also​ ​seek​ ​to​ ​reduce​ ​conflict​ ​and​ ​avoid​ ​a​ ​costly​ ​dispute​ ​and​ ​court​ ​proceedings​ ​if​ ​the
relationship​ ​fails.​ ​It​ ​is​ ​not​ ​unusual​ ​for​ ​a​ ​relationship​ ​to​ ​fail​ ​because​ ​the​ ​parties​ ​do​ ​not​ ​agree​ ​about​ ​finances
or​ ​financial​ ​management.​ ​Accordingly​ ​discussing​ ​these​ ​issues​ ​and​ ​resolving​ ​how​ ​to​ ​manage​ ​them​ ​can
avoid​ ​disagreement​ ​later.
Are​ ​there​ ​and​ ​Disadvantages​ ​to​ ​having​ ​a​ ​Binding​ ​Financial​ ​Agreement?
Sometimes​ ​couples​ ​are​ ​reluctant​ ​to​ ​discuss​ ​the​ ​possibility​ ​of​ ​a​ ​separation​ ​or​ ​divorce​ ​at​ ​the​ ​beginning​ ​of
their​ ​relationship.​ ​However​ ​a​ ​financial​ ​agreement​ ​can​ ​be​ ​entered​ ​into​ ​at​ ​any​ ​time,​ ​even​ ​after​ ​the​ ​parties
have​ ​been​ ​together​ ​for​ ​some​ ​time.
A​ ​couple​ ​can​ ​always​ ​agree​ ​to​ ​the​ ​division​ ​of​ ​their​ ​property​ ​and​ ​assets​ ​and​ ​maintenance​ ​after​ ​the
relationship​ ​has​ ​broken​ ​down​ ​and​ ​the​ ​​Family​ ​Law​ ​Act​​ ​makes​ ​provision​ ​for​ ​the​ ​court​ ​to​ ​do​ ​so​ ​where​ ​they
cannot​ ​agree.
The​ ​Family​ ​Law​ ​Act​ ​does​ ​give​ ​the​ ​court​ ​power​ ​to​ ​declare​ ​a​ ​financial​ ​agreement​ ​invalid,​ ​and​ ​set​ ​it​ ​aside​ ​in
a​ ​number​ ​of​ ​circumstances.​ ​Such​ ​circumstances​ ​include:
● where​ ​it​ ​was​ ​obtained​ ​by​ ​fraud​ ​or​ ​duress;
● a​ ​party​ ​failed​ ​to​ ​disclose​ ​relevant​ ​matters’​ ​a​ ​party​ ​has​ ​acted​ ​unconscionably;
● where​ ​the​ ​objective​ ​of​ ​the​ ​agreement​ ​was​ ​to​ ​defeat​ ​the​ ​interests​ ​of​ ​other​ ​parties​ ​including
creditors;
● where​ ​circumstances​ ​have​ ​arisen​ ​which​ ​make​ ​it​ ​impracticable​ ​for​ ​the​ ​agreement​ ​to​ ​be​ ​carried​ ​out;
or
● since​ ​making​ ​the​ ​agreement,​ ​a​ ​material​ ​change​ ​in​ ​circumstances​ ​has​ ​occurred​ ​relating​ ​to​ ​the​ ​care
and​ ​welfare​ ​of​ ​a​ ​child​ ​and,​ ​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.
Further,​ ​any​ ​provision​ ​in​ ​a​ ​financial​ ​agreement​ ​that​ ​seeks​ ​to​ ​exclude​ ​or​ ​limit​ ​maintenance​ ​payments​ ​can
be​ ​ineffective​ ​if​ ​at​ ​the​ ​time​ ​of​ ​the​ ​agreement​ ​coming​ ​into​ ​effect​ ​the​ ​proposed​ ​recipient​ ​is​ ​unable​ ​to
support​ ​himself​ ​or​ ​herself.
If​ ​a​ ​financial​ ​agreement​ ​is​ ​set​ ​aside​ ​the​ ​court​ ​can​ ​make​ ​orders​ ​for​ ​property​ ​settlement​ ​and​ ​maintenance​ ​in
accordance​ ​with​ ​the​ ​principles​ ​set​ ​out​ ​in​ ​the​ ​Family​ ​Law​ ​Act.
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3.
Pros​ ​and​ ​Cons​ ​of​ ​Getting​ ​a​ ​Binding​ ​Financial​ ​Agreement ​ ​​ ​​ ​​ ​3
Seek​ ​legal​ ​advice
You​ ​should​ ​get​ ​legal​ ​advice​ ​before​ ​deciding​ ​what​ ​to​ ​do.​ ​A​ ​lawyer​ ​can​ ​help​ ​you​ ​understand​ ​your​ ​legal
rights​ ​and​ ​responsibilities,​ ​and​ ​explain​ ​how​ ​the​ ​law​ ​applies​ ​to​ ​your​ ​case.​ ​A​ ​lawyer​ ​can​ ​also​ ​help​ ​you​ ​to​ ​try
to​ ​reach​ ​an​ ​agreement​ ​with​ ​the​ ​other​ ​party​ ​without​ ​going​ ​to​ ​Court.
At​ ​​Havilah​ ​Legal​​ ​we​ ​have​ ​considerable​ ​expertise​ ​in​ ​​Family​ ​Law​.
Contact​ ​us​ ​online​ ​or​ ​call​ ​us:
Perth:​ ​+61​ ​8​ ​9221​ ​2339
Brisbane:​ ​+61​ ​8​ ​9218​ ​8600
(Disclaimer:​ ​The​ ​material​ ​in​ ​this​ ​article​ ​is​ ​of​ ​a​ ​general​ ​nature​ ​and​ ​intended​ ​for​ ​information​ ​only.​ ​It​ ​is​ ​not
intended​ ​to​ ​be​ ​comprehensive​ ​and​ ​does​ ​not​ ​constitute​ ​legal​ ​advice.​ ​Any​ ​person​ ​with​ ​a​ ​specific​ ​legal​ ​issue
should​ ​consult​ ​a​ ​lawyer.)
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