Binding Financial Agreements
If you are able to reach agreement on issues of property and/ or spousal maintenance you may want to enter into a Binding Financial Agreement. A Binding Financial Agreement includes all of the property arrangements that you and your partner have agreed to. There are different types of Agreements that may be entered into under the Family Law Act 1975;
1. A section 90B Agreement (commonly known as a “pre-nuptial Agreement”) which is entered into between two people who are intending to marry;
2. A Section 90C Agreement, which is entered into between two people who are married and/ or separated, but who are not yet divorced;
3. A Section 90D Agreement, which is entered into between two people who are divorced.
A Binding Financial Agreement is a financial agreement, and does not include parenting arrangements.
Binding Financial agreements are a much more cost effective option for parties as it removes the Family Court from the process. In other words the Binding Financial Agreement does not have to be approved by the Family Court and the agreement is not registered with the Family Court. Of course if the agreement is breached then the Family Court is the jurisdiction where the litigation is launched in order to enforce the Binding Financial Agreement.
Four step process to calculate the asset pool
1. The Court will ascertain the net asset pool of both parties. The net asset pool is the total value of all the assets owned by either or both parties. The net asset pool includes anything acquired before or during the marriage, as well as after separation. In ascertaining the net asset pool, the Court will also consider other financial resources over which a party has influence, control or prospective entitlements. Ascertaining the net asset pool can be highly complicated. Accurate valuation of assets requires that many factors are taken into consideration, such as issues regarding taxation, stamp duties, and the appreciation or depreciation of asset values.
2. The Court will assess the contributions from both parties (both financial and non-financial). There are many types of contributions that may have been made by either spouse. The Court considers all of the following: * financial contributions * non-financial contributions (as a homemaker or primary carer of children) * gifts, bonuses and inheritance * initial contributions (assets attained before marriage)
3. The Court will assess the future needs of both parties. The Court takes into account many factors when deciding on the future needs of both parties. these include: * Age and health * Capacity to earn money * The property and assets of each party * New relationships (and new financial circumstances) * Future parenting responsibilities (care and support)
4. The Court will consider the practical effect of the proposed property settlement, and whether it is “just and equitable” to both parties. The decision is made taking into account all of these factors. Legally, superannuation is dealt with separately to property orders. However, a Court is likely to take it into account when making a decision on property orders.
Pre Nuptial Agreements
It is now possible for people in Australia to enter into a Pre-Nuptial Agreement. A Pre-Nuptial Agreement is a type of Binding Financial Agreement. A Pre-Nuptial Agreement is a legally binding Agreement between two people who are contemplating marriage to each other. It is only binding in the event that the marriage occurs.
A Pre-Nuptial Agreement is an Agreement that deals with all or any of the property of two people who are contemplating marriage. Pre-Nuptial Agreements can be beneficial, in that they allow people to define their financial rights and responsibilities in the event that they separate, which can help avoid confusion, provide security and minimise legal costs.
As Pre-Nuptial Agreements are legally binding, it is important for people who are contemplating entering into such an Agreement to obtain sound, independent legal advice from an experienced solicitor.
De Facto Relationships
De-facto relationships are governed under the Property Relationships Act 1984. In the event of a breakdown in a de-facto relationship, separating couples can enter into legally binding arrangements in relation to property matters and the care of children.
Parenting matters are dealt with under the Family Law Act and the same provisions apply in relation to children of de-facto couples as apply in relation to children of married partners.
De Facto Relationships That Break Down On Or After 1 March 2009 now fall within the provisions of the Family Law Act 1975.
The law provides that de facto couples can make cohabitation agreements known as Financial Agreements before, during or after their relationship. The Family Law Act s.90UD provides for Financial Agreements to be entered into by the couple after the breakdown of their relationship.
Financial agreements are binding on parties if in writing, signed by both parties and with a certificate annexed to the agreement certifying that both parties have received independent legal advice prior to signing the agreement.
The court can set aside an agreement if: it was entered into by fraud, it would be impracticable to enforce it, circumstances have changed, the contract is voidable or a party to the agreement engaged in conduct that was unconscionable at the time of making the agreement.