Binding Financial Agreement Sydney

Binding Financial Agreements: Prenups, Postnups & Cohabitation Agreements

Binding financial agreements are also referred to as financial agreements, pre-nuptial agreements (prenups), post-nuptial agreements (postnups) and cohabitation agreements. As the names suggest, they may be made before marriage, during a relationship, or after a marriage or relationship ends. Financial agreements state how the parties’ financial resources, liabilities and assets will be dealt with if or after they separate. They may also contain provisions regarding financial support (maintenance) by one partner for the other.

How is a Binding Financial Agreement Made?

A valid financial agreement must meet strict requirements set out under the Family Law Act 1975. The agreement must follow a specific format and include certain acknowledgements. Each party must obtain independent legal advice, and both the parties and their respective lawyers must correctly sign the agreement.

Financial agreements do not require court approval or registration. However, courts may enforce them later if they are correctly prepared and no circumstances exist that would make them void. A court may set aside an agreement in certain situations, such as if it was obtained through fraud or duress.

What Can Be Included in a Financial Agreement?

A financial agreement outlines how the parties’ financial resources, liabilities, and assets will be handled after separation. This applies whether the separation is unforeseen when the agreement is made or occurs after a couple has already separated.

Provisions may cover:

Ownership of respective assets
Closing of bank accounts
Payment obligations between parties within a specific timeframe
Asset valuation
Sale of property and distribution of sale proceeds
The agreement functions as a legal contract. Each party must fulfil their obligations and act reasonably and in good faith to meet the terms.

Financial Agreements Made Before Separation

Financial agreements created at the start or during a relationship allow couples to agree in advance on how assets will be divided if the relationship ends in the future. This approach lets them opt out of the usual court processes for property division.

Whether you are entering a new relationship or are already in one, you may consider a financial agreement to retain your respective assets. The agreement can provide certainty about property division in case of separation. It can protect pre-existing assets (especially if you have children from a previous relationship), outline the handling of an inheritance, or prevent business closure if a relationship ends.

Financial Agreements After Separation

If you have separated and reached an agreement regarding the division of assets and liabilities, you can use a financial agreement to formalise your arrangements.

Alternatively, you may document your agreement in “consent orders”, which require approval by the Federal Circuit and Family Court of Australia. This method can provide a more formal way to finalise property matters after a separation.

It is essential to understand the effect of a financial agreement and determine whether it suits your property circumstances. We can discuss your situation to help you make an informed decision.