Binding Financial Agreements Archives

Navigating family disputes can be overwhelming, with emotions and legal complexities making the journey challenging. However, family law is not only about legal battles; it’s also about preserving relationships while addressing concerns and goals, and this is where collaborative practice can help.

Collaborative practice is a process of dealing with these complex issues in a way that focuses on co-operating towards a desired outcome. It really shines when it comes to family law, as it values empathy, understanding, and mutual respect over adversarial interactions.

What is Collaborative Practice?

Collaborative practice, also known as collaborative law, emphasises the importance of co-operative negotiations in family law matters, over traditional methods, that can be more adversarial.

With collaborative practice, separating couples and their lawyers engage in family-focused discussions, aiming for mutually acceptable settlements through transparent and confidential negotiations. They generally enter a binding agreement to avoid litigation, ensuring a commitment to constructive dialogue.

This approach is holistic in nature, and not only involves lawyers but also jointly retained neutral experts where necessary, promoting a comprehensive resolution that considers the well-being of the entire family, rather than focusing solely on individual rights or adversarial tactics.

It’s not just lawyers who sit at the table: therapists provide emotional support, financial planners give economic insights, forensic accountant experts can assist with complex valuation issues and child specialists offer perspectives centred on the well-being of the children, as some examples. This ensures that every facet of a family dispute, whether emotional, financial, or legal, is addressed with the depth and care it deserves.

One of the leading bodies promoting collaborative practice in Australia is the Queensland Association of Collaborative Practitioners, and Shannon Daykin, the Director at Daykin Family Law, is a proud member. So believe us when we say we believe in this approach!

With that out of the way, let’s look at the core values of collaborative law a bit closer.

The Core Values of Collaborative Law

When looking at collaborative law as defined by the Australian Institute of Family Studies, there are a few core values that can be identified.

Voluntary Disclosure

Both parties agree to openly share all relevant information, ensuring there’s no room for hidden agendas or surprises. This creates an atmosphere of trust, essential for constructive dialogue.

Solution-Based Approach

The focus remains squarely on finding solutions that work for everyone involved. Instead of a zero-sum game where one party’s gain is another’s loss, collaborative practice seeks outcomes where all parties can feel heard and validated.

Mutual Respect

Even in disagreements, collaborative practice prioritises respect. Recognising the intrinsic value of each individual’s perspective and feelings fosters a more constructive environment for resolution.

Engagement of Professionals

Depending on the complexity and nature of the dispute, other professionals such as financial advisors, child specialists, or counsellors might be engaged to provide a balanced solution.

Commitment to Avoid Litigation

Both parties, along with their respective lawyers, enter into a binding agreement that they’ll abstain from resorting to litigation while engaged in the collaborative process. This commitment ensures that every effort is channelled towards negotiation and consensus.

Through these central principles of understanding and cooperation, collaborative practice offers an alternative to the often aggressive dynamics of traditional legal proceedings.

Collaborative Practice in Family Law and Divorce

This co-operative practice is especially valuable in family law matters such as divorce and separation. A divorce, by nature, can be contentious and heavy with emotions. However, applying the principles of collaborative law to divorce proceedings promotes an environment where both parties strive for a collective solution.

Instead of courtrooms, decisions surrounding the divorce are made in collaborative meetings, ensuring both parties have a voice. There’s less confrontation, often leading to better, more sustainable outcomes. This approach ensures a fair resolution in terms of tangible assets and financial matters but also a careful navigation of emotional and psychological aspects associated with divorce.

Benefits of Collaborative Practice

Using collaborative practice to resolve disputes can significantly influence not just the immediate outcome, but also the long-term well-being of all involved. When dealing with disputes through Collaborative Practice, it offers a range of benefits that make it a compelling choice for many, such as:

Client Empowerment and Control

Unlike the unpredictable nature of court proceedings, Collaborative practice places the power squarely in the hands of the individuals involved. Clients are active participants, shaping the course of discussions and decisions. This empowerment instils a sense of ownership and commitment to the resolutions reached.

Positive Environment for Children

In family disputes, especially those involving children, the overarching goal is often to ensure their well-being and shield them from undue stress. Collaborative practice, with its emphasis on dialogue and understanding, ensures that children are spared the brunt of adversarial confrontations. Their needs and emotions are prioritised, ensuring a more nurturing environment amidst the upheaval.

Cost-Effective and Efficient

The prolonged nature of traditional litigation can be both time-consuming and financially draining. In contrast, collaborative practice, by sidestepping court battles, often results in quicker and more cost-effective resolutions. The collaborative approach emphasises direct communication, which can lead to swifter consensus and lower costs in the long run.

Preservation of Relationships

Family disputes, if handled combatively, can leave a lasting effect on relationships. Collaborative practice strives to prevent estrangements. By fostering mutual respect and understanding, it encourages parties to move past their differences, preserving familial ties. This becomes especially important in situations where ongoing interactions, such as co-parenting, are inevitable.

Fostering of Mutual Respect

By treating each perspective with dignity and value, collaborative practice allows for more harmonious interactions. Over time, this approach can help replace animosity with understanding, leading to more sustainable resolutions.

Collaborative Practice at Daykin Family Law

If you are going through a family dispute and are seeking a resolution-centric approach, Daykin Family Law is here to guide and support you. Our expertise in collaborative law ensures you’re not just represented but also understood, respected, and empowered. Contact us today for guidance on collaborative methods for any family law-related concerns, and whether this may be right for you and your family.

On October 11 2023, the Queensland Government, under the leadership of the Palaszczuk administration, marked a significant milestone in the battle against domestic, family, and sexual violence by introducing landmark legislation that will make coercive control a criminal act in Queensland.

The bill, known as the Criminal Law (Coercive Control and Affirmative Consent) and Other Legislation Amendment Bill 2023, comes in the wake of recommendations from Queensland’s Women’s Safety and Justice Taskforce.

In a public statement, the Queensland Government stated that the offence of coercive control will carry a maximum sentence of 14 years in in prison, and criminalises the actions of an adult under the following conditions:

the person is in a domestic relationship with another person;
the person engages in a course of conduct against the other person that consists of domestic violence occurring on more than one occasion;
the person intends the course of conduct to coerce or control the other person; and
the course of conduct would, in all the circumstances, be reasonably likely to cause the other person harm (with ‘harm’ defined in the Bill to mean any detrimental effect on the person’s physical, emotional, financial, psychological or mental wellbeing, whether temporary or permanent).

At this stage the new coercive control laws won’t come into effect until 2025, but this Bill still represents a significant step forward in addressing domestic violence in the state.

What is Coercive Control?

Coercive control is commonly understood as a form of domestic abuse where one individual consistently exercises power and dominance over another through behaviours that intimidate, threaten, or undermine the victim.

Instead of, or in addition to, physical violence, it involves a pattern of manipulative behaviours that may include emotional, psychological, financial, and digital control, aimed at making the victim reliant on the perpetrator and restricting their independence.

The intent often is to trap the victim in the relationship and deprive them of their agency and autonomy. This recent legislation has criminalised this behaviour, recognising its significant detrimental impact on the victim’s physical, emotional, financial, psychological, or mental wellbeing.

Find out more about the signs of coercive control and what to do when you spot them.

How Did This New Law Come About?

This law arises from the first report released by the Queensland’s Women’s Safety and Justice Taskforce which is an independent, consultative taskforce created by the Queensland Government.

The report, known as Hear Her Voice – Report one – Addressing coercive control and domestic and family violence in Queensland, was first released in 2021, and features 89 recommendations to the Queensland Government on how to reform the domestic violence service and justice systems. These recommendations were devised after listening to more than 500 submissions from predominantly women and girls in regard to their experiences with coercive control.

Hear Her Voice - Hearing Queensland’s Women Loud and Clear

The Hear Her Voice report brought to light the pressing issues that many victims face when seeking help. An overwhelming number of victims recounted unsatisfactory responses when reaching out to the police for assistance with domestic violence. This raised concerns about inconsistent and inadequate training for officers handling these sensitive cases. Many victims detailed being turned away, not being believed, or having their experiences minimised by the very people who were supposed to protect them – the police.

The report found that the disconnect and inconsistency in responses had led to a decline in trust towards the Queensland Police Service (QPS) among many victims of domestic and family violence. The Taskforce acknowledged that while significant investments had been made in the QPS and there were officers and teams doing commendable work, cultural issues persisted, preventing the effective handling of domestic violence cases.

To address these deeply ingrained issues, the Taskforce recommended the establishment of an independent commission of inquiry into the police. This commission’s report led to a $100 million investment into a variety of reforms and initiatives to provide enhanced support and protections to those caught up in domestic violence, among which was the introduction of the new laws criminalising coercive control.

What Other Changes Can We Expect?

On top of the new legislation criminalising coercive control, the Queensland Government has stated there will be:

Enhanced intervention and better victim support: Increased resources for services to manage and reform offenders and provide additional support for survivors to ensure their safety and recovery.
New perpetrator diversion scheme: New strategies to hold perpetrators responsible via a court-driven program directing offenders to intervention sessions.
New aiding violence offence: Charges for those indirectly enabling domestic violence will be established.
Tougher penalties: New aggravating factors will be introduced to further penalise domestic violence offences.

On top of this the Queensland’s Women’s Safety and Justice Taskforce released a second report in 2022 titled Hear her voice – Report two – Women and girls’ experiences across the criminal justice system, that is split into two volumes: volume one and volume two.

Hear her voice – Report two

Hear her voice – Report two – Women and girls’ experiences across the criminal justice system delves deep into the challenges women and girls encounter within the criminal justice system, both as victims of sexual violence and in roles as accused individuals or offenders.

Report Two outlines a strategic plan for Queensland, aiming to improve our criminal justice system, ensuring those who interact with it – whether as victims, accused, or both – receive trauma-informed care. The Queensland Government stated that it is committed to considering all 188 recommendations from the Taskforce.

What Does This Mean for You?

With these extensive changes and commitments, Queensland residents can ideally anticipate a criminal justice system more attuned to the nuanced challenges faced by victims, ensuring a more compassionate, responsive, and robust framework against domestic and family violence.

The current legislative changes are just the beginning of a broader shift towards redefining how Queensland addresses domestic and family violence.

Factors That Influence the Duration of a Divorce

The legal framework in Australia provides certain guidelines and timelines for divorce, but individual cases can vary widely in their duration.

It’s also important to note the distinction between the divorce itself, which is simply the legal severance of the marriage, and everything else that is separate such as property settlement, child support, spousal maintenance etc. While the actual time between filing for divorce and having a divorce order issued by the court usually only takes several months, the rest of the proceedings relating to other matters may take much longer.

Divorce is usually granted in two steps:

Step 1: Court order

If all the requirements are met and the court is convinced that adequate provisions have been set for any children involved in the relationship, a court order will be issued. However, it’s crucial to recognise that a period of time must usually pass before the order takes effect.

Step 2: Finalising the Divorce

Following the issuing of the initial court order, there is a standard waiting period. The divorce order generally becomes absolute 1 month and 1 day after the order is made, marking this date as the official divorce date. However, there are circumstances where the court might have compelling reasons to delay the granting of the divorce beyond this timeframe.

There are two other common factors that may delay the actual divorce process itself:

if you struggle to serve your spouse with sealed copies of the divorce application, although this is only relevant if you make a sole application.
If the other party objects.
if the application itself has any issues.

Now let’s look at the full timeline and process of separation, divorce proceedings, and all other relevant factors to get a more comprehensive picture of the duration between the initial separation, the finalised divorce, and property settlement.

The Process and Timeline of Separation and Divorce Proceedings in Australia

While each situation may have unique circumstances, there are general procedures in place that influence how long divorce takes in Australia to ensure fairness and due diligence.

Initial application: Once you’ve decided to legally end your marriage, the first step is to file an application for divorce. This can be a sole application (filed by one party) or a joint application (filed together by both parties). A sole application will need to be served on the other party in a specific way and a further document will need to be filed.
Mandatory waiting period: In Australia, there’s a mandatory 12-month separation period before the court considers your divorce application. This means that from the time you and your partner decide to separate, you must wait at least 12 months before you can file for divorce.
Response and possible mediation: Once the application has been filed and served (in case of a sole application), the other party has 28 days (if they’re in Australia) or 42 days (if they’re overseas) to respond. If disagreements arise — for instance, disputes over the date of separation or arrangements for children — mediation may be suggested. Mediation can extend the duration of the divorce process, as it involves meetings, discussions, and potentially multiple sessions to arrive at mutual agreements.
Final hearing and judgement: After all the above stages are completed, the divorce will progress to a final hearing. In many cases, especially for joint applications, you may not need to attend court. The judicial officer will review the evidence, ensure all criteria are met and, if everything is in order, grant the divorce. Once the divorce is granted, there is a further wait of one month and one day before the divorce becomes final, as outlined above.

While the procedure might seem straightforward and sequential, each step can carry emotional, logistical, and legal significance. And though the timelines may vary depending on individual circumstances, understanding the general outline ensures you’re better prepared for the journey.

How Long Does Property Settlement Take?

Beyond the emotional turbulence of a divorce, the practical implications concerning assets, property, and finances are often significant. Property settlement is an essential aspect of many divorces, ensuring that both parties can move forward with clarity and security regarding their financial futures.

A divorce property settlement refers to the process through which assets, debts, and finances are divided between both parties after separation. This isn’t just about tangible assets like a home or bank accounts; it can also encompass superannuation, investments, and other financial interests.

Much like the divorce process itself, the duration of property settlement can be influenced by several factors:

Complexity of assets: If the couple has multiple assets, overseas investments, or complex financial portfolios, or a business for example, valuations (and the engagement of experts) and extensive disclosure may be needed. This can cause delay in some matters.
Level of agreement: A mutual agreement on the division of assets can make the process swifter. If both parties agree on who gets what, it’s likely to be faster than situations where disputes arise and mediation or legal intervention becomes necessary.
Legal processes: Ongoing negotiations can draw matters out and cause delay, as can instituting court proceedings. Mediation can often be an effective way to reach agreement sooner.

It’s worth noting that while the divorce might be finalised, property settlement can take place either before or after the divorce order has been made. However, it’s crucial to be aware that once a divorce order takes effect, a 12 month time limit commences for parties to file in the Court for property settlement and/or spousal maintenance, or leave may need to be sought to file out of time. For separated de facto couples, this time limit is 2 years from the date of separation. Such leave applications can be expensive and success is not guaranteed. Find out more about how assets are divided in a divorce.

Our Divorce Lawyers Can Help You Through This Process

For more information on how long divorce takes in Australia, reach out to Daykin Family Law today.

Whether you are separating from your de facto partner or spouse, there are often many decisions to make, from the division of finances and property settlement to arrangements for child support and divorce. Our divorce lawyers are here to help you every step of the way. Shannon Daykin is an Accredited Family Law Specialist with extensive experience in all aspects of family law. Contact Daykin Family Law today to arrange a reduced fixed fee initial consultation.

In this article, we look at how assets are divided in a divorce in Australia.

Navigating the challenging path of divorce is difficult enough without the added worry of how assets will be divided, which can be a mystery for many. This crucial process, often marred by emotional turmoil and tension, is of immense importance as it can significantly impact the financial stability of each party involved.

In Australia, the law provides specific guidelines in essence on asset division in the event of divorce or de facto separation. It’s a fairly complex process, more complex than many think, steeped in legislation and legal intricacies, which mandates careful consideration of several factors.

This article aims to shed some light on these factors, helping you understand how assets are divided in a divorce in Australia, and provide you with the essential knowledge to navigate this path with clarity and confidence.

What are Assets in a Divorce?

Assets that you’ll need to consider when dividing assets in a divorce include (but are not limited to):

The family home: Often the largest shared asset between partners.
Vehicles: Cars and any other owned vehicles.
Businesses/entities: Ran by one or both parties, or a business interest for example.
Investment properties: Real estate properties acquired as a financial investment.
Financial investments: This includes shares, stocks, mutual funds, and bonds.
Family trusts: Established for various purposes such as tax planning or asset protection.
Personal property: This can include items like jewellery and collectibles.
Household items: Everyday items that may hold value.
Savings: Monies accumulated over time.

Alongside assets, you also need to consider liabilities during divorce, for example:

Personal or car loans: Any personal or motor vehicle loans taken out during the marriage.
Business loans: Financial obligations tied to any business owned jointly or individually.
Home mortgage: The outstanding debt on the family home or other properties.
Credit card debt: Financial obligations from credit card usage during the marriage.

Superannuation and other financial resources also often need to be considered as part of the net assets available for distribution.

Now, let’s look at how to split these assets in a divorce.

How to Divide Assets in Divorce

There are a few common methods used to split assets during a divorce in Australia, including.

Common Methods Used to Split Assets

Non-legal arrangement: This is often used in amicable divorces, where both parties mutually agree on the division of assets without the need for legal documentation. However, due to the lack of legal paperwork, it leaves room for potential disputes, as one party can later approach the court for financial orders as per the Family Law Act, for example. Due to this risk, it’s not commonly recommended by legal professionals.
Binding financial agreement (BFA): A BFA is a legally binding document that can outline matters such as how the assets should be divided between the couple. It can be signed at any stage of the relationship – before, during, or at the end. A BFA stands unless there are exceptional circumstances that warrant it being set aside. It’s essential to engage a lawyer to draft and implement a BFA. It is a requirement that both parties have independent legal advice for a BFA to be binding and enforceable.
Consent orders: Consent orders are a prevalent method used by couples finalising their financial affairs. Both parties agree on the division of assets and submit an application to the Federal Circuit and Family Court of Australia detailing their agreement. A Judicial Registrar reviews and approves these orders, making them legally binding.
Litigation: This method is typically the last resort when former couples can’t agree on how to divide their assets. The Federal Circuit and Family Court of Australia (Division 1) and the Federal Circuit and Family Court of Australia (Division2) takes on the responsibility of deciding the division of assets, liabilities and financial resources in the event of dispute. The process can be lengthy (up to a year or more), costly, and requires regular Court attendance. It’s generally avoided unless absolutely necessary.

It’s important to remember that in the case of divorce in Australia, there is no fixed formula for asset division. It’s a misconception that assets are always divided equally; the actual division considers a variety of factors and is not a simple 50-50 split. The Court takes into account each party’s financial and non-financial contributions, the future needs of each party, and the justice and equity of the proposed division, for example. Understanding these issues can help individuals navigate the financial implications of divorce more effectively.

What to Consider When Dividing Your Assets In Divorce

In cases where negotiations fail and both parties cannot agree on property division, a Court-guided process is often necessary. It’s important to understand that divorce, which is the legal dissolution of a marriage, is a separate legal process from asset division and property settlement.

Property division can be finalised while the couple is still living together after separation or before the divorce is finalised. When the Court is involved, a five-step process is used to determine the division of assets. The substantive four steps are, briefly put:

Valuing the assets: The initial step involves identifying and placing a value on the former couple’s assets, liabilities, and financial resources. This includes assets acquired before, during, and after the marriage. Assets can range from business interests, investments, vehicles, savings, and real estate, to even lottery winnings. Both parties’ superannuation benefits are also included in the asset pool.
Analysing contributions: The court then evaluates the financial and non-financial contributions of both parties initially, during the course of the relationship, and after separation.
Assessing future needs: The future needs of both parties are considered next. This involves evaluating factors such as age, health, income, earning capacity, as well as care of children of the relationship under the age of 18 years, as some examples. The Court determines if any adjustments need to be made to the contribution-based entitlement on the future needs of each party.
The practical effect: The final step involves the Court considering the practical impact of the property settlement on both parties to ensure that the outcome is just and equitable.

Now, let’s look at a specific example.

Example of Asset Division in an Australian Divorce

Jack and Lily are a married couple who have decided to separate. They have been married for 12 years, during which time they both worked full-time and had roughly the same annual income. They have two children, aged 6 and 9, who will be primarily living with Lily post-separation.

Their assets include:

A family home valued at $1.3 million

Savings amounting to $80,000

Two cars worth a combined value of $50,000

Superannuation: Jack’s superannuation is $200,000 and Lily’s is $180,000

Their liabilities include:

Remaining mortgage on the family home of $500,000

Car loan of $20,000

Credit card debt of $10,000

By totalling all the assets and subtracting the liabilities, we determine the net asset pool:

Total assets: $1.3m (home) + $80,000 (savings) + $50,000 (cars) + $200,000 (Jack’s super) + $180,000 (Lily’s super) = $1,810,000

Total liabilities: $500,000 (mortgage) + $20,000 (car loan) + $10,000 (credit card debt) = $530,000

So, the total net asset pool is $1,280,000 ($1,810,000 – $530,000).

Jack and Lily made equal financial contributions, but Lily took on the role as primary carer for the children in addition. Lily may, in that scenario, receive a higher percentage in her favour on the contributions step.

Lily will continue to be the children’s primary carer, so Lily may also receive an uplift on the future needs factors.

For example, let’s assume the court decides on a 60%/40% division in Lily’s favour. Lily would then receive $768,000 (60% of $1,280,000), and Jack would receive $512,000 (40% of $1,280,000).

Please note that this is a simplified example and actual asset division can be complex, depending on a multitude of factors. It’s crucial to consult with professional legal counsel, such as the team at Daykin Family Law, for guidance tailored to your specific circumstances.

Contact Daykin Family Law if You Need Help with Your Divorce Today

If you’re facing a divorce in Brisbane or Wider Queensland and are unsure about the division of assets, don’t hesitate to contact our team at Daykin Family Law. We’re dedicated to providing you with pragmatic advice to solve your issues efficiently and help you move towards the next chapter of your life.

Understanding your obligation to pay or right to receive spousal support

It is not uncommon for couples to mutually support each other financially over the course of a de facto relationship or marriage. What you may not realise is that ex-partners may also be entitled to ongoing spousal support, with others obligated to give such support. Read on to discover the basics of spousal maintenance, how you calculate payments and how it differs from other family law financial agreements.

Spousal maintenance, spousal support and alimony payments (as they call it in the USA)

Spousal maintenance is a payment given from one spouse to another as a means of providing financial support. It may be a periodic or a lump sum payment, as some examples. Spousal maintenance (for married parties) or maintenance (for former de facto couples) is usually paid due to a range of factors, such as care of children of the relationship under 18 years, an illness or other health condition or other relevant factors.

This support can be ordered by the Court if it is not agreed, with varying lengths of time for such payments to be made in the case of periodic spousal maintenance/maintenance.

Spousal maintenance can often be confused with alimony, an American term not used within the Australian legal jurisdiction. However, this is essentially equivalent to spousal maintenance, maintenance or spousal support, as some call it.

Calculating spousal maintenance

While there are many services online that will claim to calculate how much you may be entitled to, in truth, there are a number of factors involved making it difficult for any online service to be able to come to an accurate conclusion.

However, the starting point is looking at a party’s need. This can be done in reference to a party’s income less their reasonable living expenses. The second step then is to assess the other party’s capacity to pay spousal maintenance, taking into account their income and reasonable living expenses among other things, and ascertaining whether there is a surplus.

Applying for spousal maintenance

A party seeking to receive an order for spousal maintenance must apply within 12 months of a divorce order taking effect, or within 24 months of the end of a de facto relationship. Applications can be made to the Court outside of these time limits, but it can be a costly process seeking the Court’s permission to proceed out of time, and success is not guaranteed.

Spousal maintenance is not an automatic part of the separation or divorce process. If an agreement cannot be reached, the party that is requesting assistance must submit an application and then establish that they have a need for spousal maintenance.

Some of the factors that are considered by the courts, briefly referred to earlier, are:

The care of children under the age of 18 years – the parent/caregiver may be entitled to additional support for the spouse themselves
Any existing financial support agreement between parties which extends beyond the relationship’s termination
Age and health – if one party is significantly older than the other or has a medical condition
A party’s inability to obtain employment and/or access to reasonable living standards
A party’s access to other financial support, such as the pension or other government benefits
The income, additional property, and financial resources of the two parties – is one party significantly advantaged over the other?
The factors relevant to the relationship

While there is no limit to what the courts may consider in terms of a spousal maintenance application, Australia is a ‘no-fault’ jurisdiction. As such, the Courts will not factor in who ended the relationship and why.

The Court’s involvement

A Court can make orders that a party must pay spousal maintenance to the other party, with the Court most frequently ordering periodic or lump sum payments. Spousal maintenance orders can also include the transfer of property.

On a successful application, the Court will also stipulate any relevant terms and conditions, including how long the payments will last, particularly when made as part of final orders.

Other forms of support/payments

Spousal maintenance is different and separate to other forms of financial support or agreements, such as child support or property settlement. Child support payments are made in support of the child/children. Property settlement payments can be made as part of dividing assets as part of an overall property settlement following the breakdown of a marriage or de facto relationship.

Daykin Family Law can guide you through the process of applying for or contesting an application for spousal maintenance. Contact us today for an overview of your options and how we can help you reach a positive solution.

We give you expert legal advice on the most appropriate and cost-effective course of action for you and your family. Contact us on (07) 3338 5645 to make an appointment for a fixed fee initial consultation today.

The blog published by Daykin Family Law is intended as general information only and is not legal advice on any subject matter. By viewing the blog posts, the reader understands there is no solicitor-client relationship between the reader and the blog publisher. The blog should not be used as a substitute for legal advice from a legal practitioner, and readers are urged to consult Daykin Family Law on any legal queries concerning a specific situation.

We are regularly contacted by people asking for advice on the preparation of a pre-nuptial agreement or a ‘pre-nup’, as we’ve covered in our previous article here. In Australia, pre-nups are actually referred to as Binding Financial Agreements and we often help clients in this area, whether they’re getting married or entering a de-facto relationship, or already married or in a de-facto relationship. We’re regularly asked a series of common questions, so we demystify each one of those questions in this article to help you make an informed decision on what might be appropriate for you and your relationship if you’re considering a pre-nup.

1. What is a pre-nup?

A pre-nup, or Binding Financial Agreement (BFA) as it is referred to in Australia, allows couples to enter into a legal agreement about their financial affairs in the event of a separation. This applies to married couples (post-nuptial), those who plan to wed (pre-nuptial) and parties in a de-facto relationship.

Binding Financial Agreements were introduced to provide a mechanism for couples who are either contemplating marriage, or are already married, to organise their affairs, including what could happen to property, businesses or how they would be looked after financially following a separation.

2. Are pre-nups (Binding Financial Agreements) legally enforceable?

The Family Law Act 1975 (Cth) allows couples to enter into a Binding Financial Agreement before marriage or cohabitation, during marriage or cohabitation, and after a relationship breakdown. Each party must enter into the Binding Financial Agreement willingly and effectively must be fully informed of the advantages and disadvantages of entering into the agreement, their rights etc. Each party must receive independent legal advice about the Binding Financial Agreement.

To ensure any pre-nup is less open to challenge later on, the parties should ensure that any contemplation of a Binding Financial Agreement is done in ample time to prepare the document and negotiate the terms before any wedding, and ensure there is no duress or undue pressure on either party. Both parties need time to fully consider, negotiate and obtain independent advice on the Agreement.

3. What are the benefits of having an agreement in place?

A significant benefit of a BFA is that it can provide clarity and certainty to both parties in a relationship and can extend to their families too. By setting out agreed-upon rules prior to any potential dispute, it may be more likely that the agreement will be considered by all parties to be fair and reasonable.

A BFA can seek to protect pre-existing assets from claims by the other party, which is important when one party is in a superior financial position to the other. Often one party has accumulated assets prior to the relationship without contribution from the other party and therefore wish to ensure those assets remain theirs upon separation.

4. What are the cons and pitfalls?

The Family Law Act gives the Court power to set aside a BFA in a number of circumstances.

Such circumstances include:

where it was obtained by fraud or duress;
a party failed to disclose relevant matters;
where the objective of the agreement was to defeat the interests of other parties;
where circumstances have arisen which make it impracticable for the agreement to be carried out;
since making the agreement, a material change in circumstances has occurred relating to the care and welfare of a child and, as a result of the change, the child or a party to the agreement will suffer hardship if the court does not set the agreement aside;
Any provision in a financial agreement that seeks to exclude or limit maintenance payments can be ineffective if at the time of the agreement coming into effect the proposed recipient is unable to support himself or herself without resort to an income tested pension benefit or allowance.

If a financial agreement is set aside, the Court can make orders for property settlement and maintenance in accordance with the principles set out in the Family Law Act.

5. What would the agreement contain?

The agreements are tailored to individual circumstances; no one agreement is the same as another. The agreement can deal with the division of both property (assets, liabilities, superannuation and financial resources) and spousal maintenance, or some agreements deal only with property division and leave spousal maintenance to be dealt with at a later time with no agreement prior to a separation.

The agreement may set out how assets are to be held and managed during the marriage, for example, whether a joint account will be opened and how property is to be held.

6. Do lawyers need to be involved?

Put simply, yes! For a BFA to be in fact “binding” under the Family Law Act, it requires, among other things, a lawyer to certify that they have given advice to their client with respect to:

The effect of the Agreement on that person’s rights; and
The advantages and disadvantages, at the time the advice was provided, of that person making the Agreement.

Without this advice, the Agreement may not be binding and enforceable even if it is duly signed by all parties involved.

7. How do I terminate an existing Binding Financial Agreement?

A Binding Financial Agreement can be “terminated” in one of two ways:

the parties can enter into another financial agreement, provided that a specific provision is included in the new agreement stating that the former agreement is terminated; or
the parties can enter into a “termination agreement” pursuant to section 90J (for married couples) or section 90UL (for de facto couples) of the Family Law Act. As with the original BFA, for a termination agreement to be binding and enforceable, it must be signed by all parties to the agreement, and each of the parties must have received independent legal advice with respect to the termination agreement.

8. What is the cost of an agreement?

Costs depend on the complexity of the financial arrangements and the length of the negotiations. However, the existence of a fair and negotiated agreement can mean legal costs are significantly lower in the long run than if there are subsequent divorce proceedings.

If you, or someone you know, is entering a relationship or marriage and could benefit from a discussion about whether a Binding Financial Agreement is right for them, please contact us for an appointment at our office in Fortitude Valley, Brisbane.

At Daykin Family Law, we are often contacted by couples asking for advice on the preparation of a prenuptial agreement or ‘prenup’. Prenup is a popular terminology, but actually refers to agreements taken prior to marriage in the USA and other countries. The equivalent of a prenup in Australia is known as a Binding Financial Agreement.

What is a Prenuptial Agreement?

A prenup, or Binding Financial Agreement as it is referred to in Australia, allows married couples (post-nuptial), soon to be married couples (pre-nuptial) and parties in a defacto or same sex relationship, to enter into a legal agreement about their financial affairs in the case of a relationship breakdown.

Binding Financial Agreements were introduced in Australia in 2000 to provide a mechanism for couples who are either contemplating marriage, or are already married to organise their affairs, including what could happen to property, business or how they would be looked after financially following a separation.

Should I get a prenup?

Prenups, or Binding Financial Agreements, are designed to remove uncertainty and avoid the stress of going to court. When done correctly, they can be a very useful tool for financial planning. It is, however, very important to take your time, and use an experienced lawyer to demonstrate that each party has had the opportunity to negotiate and reach a fair decision on the agreement. Agreements done in haste have been known to be challenged by the court.

In a recent case known as Thorne v Kennedy, the High Court overturned a prenup between a young woman and her property developer husband after she was made to sign the agreement the night before her wedding. The judges ruled that the document was effectively signed under duress. Therefore, it’s important that a pre-nuptial agreement is agreed upon by both parties over an adequate period of time. Other circumstances where the court can overturn an agreement is where the agreement would put unnecessary hardship on the spouse, especially where there are children involved.

In sum, pre-nuptial agreements have many benefits when entered into with the right legal advice from a family lawyer. They can protect your property and estate plan, reduce conflicts, clarify special agreements and establish ground rules for future matters. If you’re considering a BFA and would like some advice on whether it’s right for you, contact us today.

When separation occurs, it can be difficult to know what you need and who to speak to. Let us explain what a binding financial agreement is and when it might be appropriate.

What is a binding financial agreement?

A binding financial agreement is a document that records an agreement as to the division of a married or de facto couple’s respective property interests. A binding financial agreement can address how the property and financial resources of a couple are dealt with, as well as spousal maintenance.

A binding financial agreement can be completed either before a relationship has commenced, during a relationship or after a relationship has broken down. For the purposes of this blog, we will focus on binding financial agreements completed after a relationship has ended.

What are my options for recording a property settlement?

When a couple separates, and they agree about the division of their property interests, there are usually two options available to them to enter into a property settlement and finalise their financial relationship with one another. For a binding and enforceable property settlement agreement, they can either:

Enter into a binding financial agreement; or
Apply for consent orders and file the proposed orders with the court for the court’s consideration and approval.

There are advantages and disadvantages to each of the above options, so you should seek legal advice as to the option which will be most suitable for your circumstances.

Should I choose a binding financial agreement?

A binding financial agreement may be more suitable in circumstances where, for example, the parties wish for their agreement to be recorded and kept strictly private and confidential between the parties and their solicitors. Another example is where the agreement may not be seen in the eyes of the court as being a just and equitable distribution of the net assets. A private agreement such as this done correctly will effectively oust the jurisdiction of the court to make property adjustment orders.

Binding financial agreements are completed without any supervision by the court system. Therefore, you have more control over when the agreement comes into effect and are not subject to the court’s final approval of the terms of settlement.

Binding financial agreements will not be suitable for all cases though. Also, they can often be more expensive than obtaining consent orders, because your lawyer will be required to take your instructions, draft detailed documents with precision to ensure it is binding and provide comprehensive written legal advice to you regarding your rights and other matters in relation to the document.

What are the requirements of a binding financial agreement?

There are strict requirements set out in the Family Law Act 1975 (Cth) (FLA) which must be adhered to for a financial agreement to be binding. Some of the requirements include, but are not limited to:

It must be in writing;
It must be signed by all parties to the agreement; and
Both parties must have received independent legal advice including on the effect of the agreement on their rights before the binding financial agreement is signed.

Binding financial agreements can be set aside by the court where the requirements have not been met, or where other circumstances are present such as fraud, non-disclosure etc. Whether a financial agreement is binding on the parties would ultimately be a decision for the court to make if it were ever challenged, so it is important to engage the right lawyer who can draft the agreement correctly and provide you with sound legal advice.

Cutting corners

You will almost certainly be able to find a “cheap and quick” binding financial agreement after a search on Google. But beware, the risks of entering into a binding financial agreement that does not satisfy legislative requirements can be significant.

It could end up costing you much more in the long run to cut corners on recording a settlement. This could be to either rectify a deficient agreement, or respond to a court application seeking property adjustment orders. This is even after you thought you had finished and settled.

Seek expert advice to ensure you are protected.

Speaking to a professional

If you have separated from your partner (or are considering it) and would like advice on your options regarding property settlement, contact Daykin Family Law today to book an initial consultation with our Director, an Accredited Family Law Specialist, at a reduced fixed fee.

Daykin Family Law has extensive experience drafting and advising on binding financial agreements and can assist with finalising your property settlement sooner so you can move forward with certainty. We can meet with you in our offices conveniently located in Fortitude Valley close to the CBD, or by phone or Skype.

Whether it’s on an American TV sitcom, or in a Kanye West song, we’ve all heard the term “Pre-nup”. But what does this mean? And how do they work in Australia? Can they be used outside of contemplating a walk down the aisle?

On this side of the globe, we have Financial Agreements. This is a contract between two or more parties that can be entered into before, during or after a relationship.

We will focus on these “pre-nup” or “pre-nuptial” Financial Agreements. These are highly technical agreements made by parties before marriage under Section 90B of the Family Law Act 1975. The agreement can cover how any or all property and financial resources of the parties will be dealt with in the event of a separation. It can also cover what spousal maintenance, if any, will be paid between the parties. Other ancillary matters can also be included.

Importantly, Financial Agreements are being used more and more to protect assets that one person brings into a relationship, or the assets that one person will receive during their relationship at some point in time from family or some other source. This allows assets to be preserved for children of a previous marriage, as an example, children that are yet to be born or even extended family members.

The possibilities are near endless. There can be an entire quarantine of property or financial resources, or one party can acquire an incremental interest over time in the other person’s property, to adjust for the passage of time or even the pitter patter of tiny feet. Financial Agreements can be reviewed at an agreed time in the future, and they can even have an end date if this is what the parties agree on and want.

These agreements are not just for people contemplating marriage. There are different circumstances where couples can enter into this type of agreement, including:

The couple is going to live together but there is no plan to get married
The couple is going to live together and they do plan to marry, but have not decided when they will get married
The couple is already living together
The couple is already married

The Family Law Act 1975 outlines specific requirements that must be met to ensure that the agreement is binding and enforceable.

One of the requirements under the Act for a financial agreement to be binding is that both parties must be given independent legal advice before the agreement is signed. This is about the effect of the agreement on the party’s rights, and the advantages and disadvantages to that party of making the agreement. The lawyers need to sign certificates to this effect.

Both parties must engage their own lawyers. A common lawyer cannot be engaged by both parties for the purposes of a Financial Agreement, even if both parties are completely in agreement about the terms and what is to happen.

The law surrounding Financial Agreements is in an almost constant state of change in Australia. The legal fraternity is currently awaiting the outcome of a High Court case involving the issue of duress when parties sign these types of agreements. It is vitally important to ensure that the lawyer you engage has a high level of knowledge around the technical and practical aspects of this area of family law.

These are sensitive issues, with people’s relationships continuing to hopefully grow and flourish while we negotiate and draw these agreements up. Often there are many people involved and invested in the process on the outer edges, such as business partners, adult children and extended family members. As a result, these matters need to be handled with care by the lawyers concerned to promote harmony where possible, and avoid unnecessary conflict which could harm the relationship.

We work with a range of lawyers who we recommend to our clients’ partner or fiancés, who share our pragmatic approach and are highly competent in this area.

Talk to us today if you are considering an agreement for your relationship, no matter what stage it is at. We can discuss with you the many varied options for how such an agreement can work for you and achieve the level of asset protection you desire.

First published 15 September 2017