Financial agreements are, essentially, a contract that:
- Can be entered into by parties who are contemplating marriage, are married, are divorced or are in a de facto relationship;
- Sets out how property is to be divided if the parties’ marriage or de facto relationship breaks down; and
- Prevents the court from making orders with respect to the property dealt with in the agreement.
Financial agreements are generally sought when only one of the parties to a marriage or de facto relationship:
- has significant assets;
- is expecting a significant gift or inheritance; or
They are also sought in circumstances where:
- either party would like to preserve assets for the benefit of children that they have had from a previous relationship; or
- The court has disapproved of the parties attempt to resolve their dispute by means of a Consent Order.
Certain formal requirements must be met if the agreement is to be binding and enforceable as between the parties:
- The agreement must be in writing;
- The parties have not previously entered into a financial agreement that has the same subject matter; and
- The agreement indicates that it has been made under the relevant section of the Family Law Act; and either
- The agreement relates to how any of the property or financial resources of the parties are to be dealt with upon the breakdown of their relationship; or
- The agreement relates to the maintenance of the parties.
The parties to financial agreement may terminate the agreement by entering into a further agreement called a “termination agreement.” The formal requirements that must be satisfied in relation to a termination agreement are identical to those of financial agreement.
Financial agreements may be set aside under any of the following circumstances:
- The agreement was entered into by fraudulent means, including non-disclosure;
- Either party entered into the agreement to defeat the interests of a creditor or with reckless disregard for a creditor;
- The agreement was either void, voidable or unenforceable;
- Circumstances have arisen whereby the agreement is no longer practicable for it to be carried out.
- A material change in circumstances whereby a child or the person with the care of the child would suffer hardship if the agreement were not set aside;
- One of the parties had engaged in unconscionable conduct in relation to the agreement;
- A payment flag in relation to superannuation entitlement that is covered by the agreement and it is unlikely that a flag lifting agreement will be made.
- The agreement deals with an unsplittable superannuation interest.