Financial Agreements are powerful documents that empower people to choose and have certainty in family law property matters but require a high level of legal advice
Financial Agreements can be entered into by people planning to marry or enter into a de facto relationship (often called prenuptial agreements); after marriage or the commencement of a de facto relationship, but before the breakdown of the relationship (often called postnuptial agreements); and after the breakdown of a relationship. The purpose of prenuptial and postnuptial Financial Agreements is to record how all or any of the property or financial resources of the parties, the maintenance of the parties or ancillary or incidental matters will be dealt with in the event of the breakdown of a marriage or relationship.
When parties are deciding whether they want to enter into a Financial Agreement, they should consider the kinds of things that can or cannot be achieved with a Financial Agreement. A Financial Agreement can help parties:
· Keep their finances separate;
· Clarify each party’s intention regarding financial responsibility during a relationship;
· Negotiate about how expenses are to be met during the relationship, whether the parties will have joint bank accounts and the purpose to which the funds in those accounts will be put;
· Engage in conversation and agree about specific purchases such as buying a home or business, or the handling of debt and how payments for that debt will be met;
· Engage in conversation about what will occur should either of them receive an inheritance or other future entitlement;
· Record what adjustment will be made to their respective financial circumstances if they have children;
· Agree about the payment of spousal maintenance to provide for an adjustment for disparity of incomes or for other reasons after separation;
· Be empowered to make their own decisions as to what should occur if they separate and not leave it to a third party to decide; and
· Have a known set of rules for the division of their property in the event that their relationship should break down.
Parties can be brought closer together by being able to have honest and open conversations not only about love but also money, property and financial planning. The development of good communication practice can help prevent the breakdown of relationships at some later time. Parties should be advised they cannot incorporate parenting issues in a Financial Agreement or issues of child support. Child support can be dealt with separately in a binding Child Support Agreement.
After dealing with property brought into the relationship it is necessary to consider property acquired during the relationship. Jacqueline Campbell provides the following useful list of categories of such property that the parties may wish to deal with in the Financial Agreement:
c) Increase in value of assets owned at the commencement of cohabitation;
d) Assets acquired using assets owned at the commencement of cohabitation;
e) Assets owned at cohabitation mixed with assets or income or contributions during the marriage;
f) Assets acquired using financial contributions made during the marriage; and
g) Assets acquired during the marriage from contributions (financial and non-financial) and homemaking and parenting.
People seeking a prenuptial Financial Agreement should be aware of the need for strict compliance with the relevant provisions of the Family Law Act for the agreement to be binding and seek legal advice.