Financial agreements, more colloquially known as “prenuptial agreements”, might seem like the exclusive domain of the rich and famous. However, since 2000 when the Family Law Act (the FLA) allowed for the creation of financial agreements, many individuals have taken advantage of the laws to protect their property. Although financial agreements might not be for everybody, if the spousal parties own substantial financial and property assets, an agreement might be a viable option in the event that a relationship has ended.
An agreement can be made before, during or at the end of a relationship, but it’s important to be aware that the courts can set aside a financial agreement under certain circumstances.
Before entering into a financial agreement, there are a few things that you should consider, and legal advice must always be sought regarding financial agreements.
What can a financial agreement cover?
The majority of financial agreements cover property and spousal support arrangements if a relationship has come to an end. Parties who are entering into a financial agreement are required by law to seek independent legal advice, prior to formalising an arrangement.
In order for a financial agreement to be binding:
• the agreement must be signed by all parties
• all parties were informed of the effect of the agreement on their rights, as well as the advantages and disadvantages of the agreement.
Can financial agreements be only entered into before a marriage?
No. Financial agreements can also be made during a marriage, provided that both parties have consented in writing to the establishing of a financial agreement. Furthermore, agreements can also be made after a separation or divorce. However, agreements made after a separation or divorce must be accompanied by a separation declaration signed by at least one of the party.
Can a financial agreement be set aside?
A financial agreement can be set aside, or terminated if the court is satisfied that:
• the agreement was obtained by fraud, such as the non-disclosure of a material matter
• the agreement is void, voidable or unenforceable
• a change in circumstance has occurred in the relationship which would make the agreement, or part of the agreement, impractical.
Please, keep in mind that any request to set aside a financial agreement must be made to the court, and if the financial agreement was properly executed meeting the requirements of the FLA, it might be difficult, as well as expensive to set aside a financial agreement.
Financial agreements can be extremely complex. If you are considering entering into a financial agreement, or having one set aside, always seek the appropriate legal advice.