Part 2 – Binding Financial Agreements…Are They Binding?
Per the title of this blog, this is the second of our three-part blog series in relation to financial separation. If you’d like to read part one, click here.
When you look at a Financial Agreement, it can be quite daunting, especially when you want to be sure that the said agreement will be binding once made.
In order for the agreement to be binding on the parties:
- The Financial Agreement must be signed by both parties independently of the other and witnessed;
- It must contain a statement to the effect that the party to whom the statement relates has been provided before the agreement was signed by him or her (and as certified in an annexure to the agreement) with independent legal advice from a legal practitioner advising on the following matters:
- The effect of the agreement on the rights of that party; and
- The advantages and disadvantages, at the time that the advice was provided, to the party of making the agreement.
- The annexure to the agreement should contain a certificate signed by the person providing the independent legal advice, stating that the advice was provided;
- The agreement should not have already been terminated and has not been set aside by a Court; and
- After the agreement is signed, the original agreement is given to one of the parties and a copy is given to the other.
It may appear simple in the few words but be wary of simplicity. A financial agreement can be over turned if a party makes an Application and the Court finds that the agreement was unjust, despite the party receiving legal advice, or if the legal advice was not given precisely as set out in the Family Law Act 1975 (Cth). Also, if one party has deliberately hidden assets from the other party, being an act of fraud, this could be sufficient evidence for the Court to overturn the agreement.
It is important that you seek specialist advice if you are looking at having a Binding Financial Agreement prepared. In our experience we have seen too many of these agreements overturned due to the fact that poor advice was obtained in the first instance. The document must be read carefully, to ensure it operates as both parties intend, or expect it to operate. Further advice must be given on what your rights, entitlements and obligations under the Family Law Act and if that equates with the terms of the agreement you and your ex-partner have agreed to. Prior to signing the agreement, it will be necessary to provide at least the last statement of all bank accounts to ensure that the balances are true and correct, and the values assigned assets and chattels actually reflect market worth.
Do not hesitate to contact us on 5679 8016 to discuss the options available and the best one to suit your needs. As a mistake made now, could cause substantial financial hardship later.