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.
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.