Binding financial agreements in NSW

A binding financial agreemen will save you both a lot of time, money and stress by:

1. Keeping the relationship amicable and out of court; and
2. Preventing future disputes (less stressful, more certainty); and
3. Possibly saving you from paying stamp duty and CGT on transfer of property.

All types of financial agreements must comply with strict legal guidelines as outlined in the Family Law Act:

1. They must be in writing and signed by all parties.
2. Each person must have received independent legal advice before signing the financial agreement.
3. The legal advice provided must have come from a lawyer in the Australian jurisdiction.
4. Each person must have signed the financial agreement voluntarily (free from coercion, duress or undue influence). For example, this means one person cannot tell the other that they will not marry them unless they sign a prenuptial financial agreement.
5. The financial agreement should contain a complete disclosure of each person’s financial circumstances.

Yes, it is mandatory. Each party must obtain independent legal advice prior to signing a binding financial agreement. You also cannot use the same lawyer and should not use the same law firm.

If you fail to obtain advice from a lawyer, the binding financial agreement will be unenforceable.

Note: You cannot just quickly “see” a lawyer or have the lawyer “witness” you sign the agreement, you must obtain a certificate of advice from them (see below).

After your family lawyer has reviewed your binding financial agreement and provided you with advice, they will give you a certificate of advice which you will sign to acknowledge that you have received it. You must then give a copy of this certificate to the other party and vice versa.

Only when both parties have received a copy will you have fulfilled the requirement of section 90G of the Family Law Act 1975.

It is always recommended that a specialised family lawyer drafts the agreement.

Having a lawyer draft the agreement will ensure the terms are written in a clear and concise manner that will make it easier for both parties’ lawyers to review and provide a certificate of advice.

Avoid online binding financial agreement templates, these very rarely meet the legal requirements and are highly likely to be overturned by a court if contested.

Yes, a binding financial agreement is suitable for ending de facto relationships, including those in a same sex relationship.

Yes, this type of binding financial agreement is commonly known as a ‘Post Divorce Property Settlement Agreement’ and is another type of BFA.

Note: Time limits do apply. If you are divorced you must formalise your property settlement within 12 months of your divorce.

No. One of the benefits of using a binding financial agreement is that you do not have Court involvement.

A binding financial agreement does not go through the courts.

A court order or consent order is a legally binding order made by the Family Court after they have reviewed an application for property settlement. The Court must agree that the outcome is just and equitable prior to making an order.

A binding financial agreement is an agreement that is entered into after two people separate.

A prenuptial agreement (prenup) is a BFA that is entered into before two people separate.

For those about to marry, already married or separated, the Family Law Act allows them to sign a financial agreement. There are three types of financial agreements:

1. Before marriage agreements, where spouses wish to quarantine previously acquired assets from the consequences of separation, or where one spouse comes into a marriage already holding interests in family business structures and there is a desire to protect those business assets from involvement in a court dispute.
2. During marriage agreements, can be used in several circumstances. It may be an agreement made when the parties are happily together and have the same effect as a pre-nuptial agreement, just made after marriage. It may be used when a marriage is in difficulty and a re-arrangement of assets is made to provide security for one or more spouse, as an asset protection measure. It could be an agreement about division of assets made after separation, but prior to divorce.
3. After divorce agreements, used as a means of securing a private settlement without any involvement of a court or third parties.

See Also: What is a prenup?

No. There is no ‘one size fits all’ binding financial agreement. Every relationship is different, which means every binding financial agreement is different.

This is especially true when there are children involved. We always recommend that a lawyer draft your binding financial agreement.

Avoid online templates, these very rarely meet the legal requirements and are highly likely to be overturned by a court if contested.

No. Children’s matters must be resolved by a consent order or a parenting plan.

An application for consent orders is filed with the Family Court of Australia. These orders formalise the agreement parents reach regarding the long term care, welfare and living arrangements for their children. Consent orders, once made, are final and may be subject to a contravention application, should one parent refuse to comply with the terms of the order. Both parents are obliged to comply with the order once made.

In the alternative, parents may enter into a parenting plan to formalise arrangements in relation to children. A parenting plan is similar to consent orders and may deal with:

• the amount of time in which the parents would spend with the child;
• where the child may live;
• the allocation of parental responsibility;
• communication with the child;
• the process for resolving disputes about the living arrangements of the child in the future; and
• the process to be used for changing the plan, taking into account the changing needs and circumstances of the child.

Because the parenting plan is not a legally enforceable document that is filed with the Family Court, parenting plans cannot be subject to any application for contravention and are therefore not enforceable by the Court.

See Also: Parenting plans & orders

Yes, a binding financial agreement can be overturned by the Court for several reasons. Common reasons include:

1. Non-disclosure – If a party does not disclose the full extent and value of their assets at the time when the agreement was drafted and signed, it may be set aside.
2. Unreasonable Pressure – If a party unreasonably pressures or coerces the other party into signing the agreement, it may be set aside.
3. Unfairness – If an agreement is not just and equitable (fair), it may be set aside.
4. Fraud – If an agreement was obtained by fraud, it may be set aside.
5. Defrauding or defeating a creditor – If an agreement was made to defraud or defeat a creditor (or creditors), it may be set aside.