The advantages of a binding financial agreement

Date: Jul 04, 2012

Going to a family lawyer with the intention of establishing a binding financial agreement can have a number of benefits for both you and your partner.

In Australia, the term binding financial agreement tends to be used instead of prenuptial agreement - and it is essential to make sure the document is legally sound.

Providing your agreement has been written up properly, it can remove the jurisdiction of the court when it comes to the distribution of your assets if a relationship breaks down.

It is also possible to eliminate the need to pay maintenance, so putting together a binding financial agreement can have significant advantages in the long run.

There is no legal requirement for the document to be lodged with the courts when it is first put together. If the agreement is sound there is also no need to go to Court at the time of separation, assets are divided in accordance with the agreement.  This can reduce everyone’s costs and heartache.

When compiling the agreement, there are certain legal requirements that must be met to ensure it remains valid.

It needs to be made in writing and signed by all the parties concerned - everyone involved must have received independent family law advice on the effects of the arrangement before making a commitment.

A signed statement from the legal expert needs to be attached to the agreement stating that all parties received advice before everybody is given a copy of the document.

Although legal advice should help make the agreement fairer and more reasonable, it does not guarantee that this will be the case, which is something the courts will take into consideration.

There are instances where the binding financial agreement cannot be enforced, such as if it was obtained by fraud or was produced to defraud a creditor or another individual.

The same situation arises if the agreement becomes unenforceable, which may be the case if a change in circumstances occurs that makes it impractical.

Consideration will also be given by the courts to the best interests of any children that may be involved - should the arrangement lead to hardship for the youngster than it will be set aside.

Authorities are keen to emphasise that binding financial agreements should not be viewed as business contracts, namely due to the social and emotional context in which they arise.

Parties are therefore urged to put their objectivity to one side and consider the impact the arrangement will have on their relationship.