Binding financial agreements: How an agreement is created, varied or set aside
May 7th, 2012
by the FindLaw Team
It’s not unusual to hear of the rich and famous before a marriage, enter into a prenuptial agreement with their spouse. If a person has substantial assets to protect, it’s probably not a bad idea to have a prenuptial agreement in place in the event of a relationship breakdown. In Australia, prenuptial agreements are more commonly referred to as, binding financial agreements, and a valid agreement, can oust the jurisdiction of the courts. When producing a binding financial agreement, there are a number of requirements that must be met in order for the agreement to be legally valid, and an agreement can be produced, before a marriage or cohabitation, during marriage or cohabitation, and after a divorce or the breakdown of a de facto relationship.
What can binding financial agreements cover?
Binding financial agreements deal with how property and finances are dealt with in the event of a relationship coming to an end, and can also cover maintenance issues. However, a binding financial agreement cannot relate to parenting matters.
What is the legal effect of a binding financial agreement?
A valid binding financial agreement, can remove the court’s ability to issue orders in regards to the distribution of assets or resources, which can usually be made under the provisions in the Family Law Act (the Act).
What are the requirements for creating an enforceable financial agreement?
In order for a financial agreement to become binding and enforceable the following formal requirements that must be met:
• be in writing and signed by all parties
• before signing the agreement, all parties were provided with independent legal advice from a legal practitioner in regards to the effect the agreement on the rights of the party, and the advantages and disadvantages of a binding financial agreement
• either before or after the signing of the agreement, a signed statement by the legal practitioner is attached to the agreement, stating that independent advice was provided to the parties
• the agreement is not terminated or set aside
• all parties must have a copy of the agreement.
When can a binding financial agreement be set aside?
Although, binding financial agreements can ouster the authority of the court, it can be set aside by an order under the following circumstances:
• the agreement was obtained by fraud
• the agreement was produced to defeating or defrauding a creditor, or with reckless disregard of the interests of a creditor
• the agreement was entered into for the purposes of defrauding another person, who is a party to the de facto relationship with a spouse party
• the agreement is void, voidable, or unenforceable
• changes in the circumstances has rendered the agreement impractical
• a material change has occurred relating to a child, and it would result in hardship for the child or the other party if the agreement is not set aside
• in making the financial agreement, the conduct of one of the parties was unconscionable
• there are certain conditions relating to superannuation.
In the event that a court sets aside the financial agreement, it can make an order which transfers property in a manner that it considers to be fair.