Financial agreements are similar to the well-known pre-nuptial agreement, but dependent upon your circumstances can be signed before, during or after a marriage depending upon your needs. In TV shows we often hear them referred to us “Pre-Nups” however, this is not always an accurate description.
Under Section 90D of the Family Law Act, financial agreements cover the following:
- division of property, finances and debts after a marriage breakdown
- spousal maintenance
- other incidental issues.
For financial agreements to be legally binding, both parties must have signed the agreement and have received independent legal and financial advice before signing.
The different types of financial agreements are:
- In contemplation of a marriage (s90B);
- In contemplation of a de facto relationship (s90UB);
- During a marriage (s90C);
- During a de facto relationship (s90UC);
- After divorce (s90D); or
- After a breakdown of a de facto relationship (s90UD).
An FA is essentially a contract that allows parties to avoid going to court and can dictate how their property is to be dealt with, as well as what maintenance might be payable by one party to another. The FLA allows parties to a de facto relationship to enter into a FA providing for the division of property in the event of the breakdown of the relationship.
FAs can be fraught with issues and require considerable expertise and often incur high legal fees because negotiations often become protracted. In a recent High Court of Australia decision in a case called Thorne v Kennedy  HCA 49 the court said that especially in the context of deciding whether prenuptial and postnuptial agreements have been entered into where there has been duress or unconscionable conduct, some of the factors which may have prominence in the BFA include the following:
- Whether the Agreement was offered on a basis that it was not subject to negotiation – e.g. one party stipulating sign here or we are done;
- The emotional circumstances in which the Agreement was entered into including any explicit or implicit threat to end a marriage or to end an engagement;
- Whether there was any time for careful reflection;
- The nature of the parties’ relationship;
- The relative financial positions of the parties and the independent advice received and whether there was time to reflect on that advice.