Financial Agreement During Marriage
Dividing Your Assets When You And Your Husband/Wife Have Not Yet Separated:
You and your husband/wife can set out how your assets can be divided if you were to separate in a document known as a “Financial Agreement”. Most of you have heard about “Pre-nuptial Agreements” which are agreements signed before you and your husband/wife are married setting out how you and your husband/wife are to divide your assets if you were to separate. These types of agreements can also be signed when you and your husband/wife are already married.
Why Enter Into A Financial Agreement When You And Your Husband/Wife Are Still Together?
A marriage separation is one of the most stressful situations that a person may ever be involved in. There is often significant emotional stress arising from the separation including what is to happen with the children, where will each of the parties live, how will each party manage their respective future living expenses and the significant emotional strain of the marriage breakdown. In addition to the emotional stress there is also the financial costs associated with a separation arising from disputes about arrangements for the children, how assets are to be divided and how each party will meet their weekly living expenses. A financial agreement signed before parties separate cannot take away all of the emotional and financial stress of a marriage breakdown but it can significantly minimise it by resolving how the assets are to be divided and how the financial needs of the parties are to be met. The certainty of knowing about each parties financial position if separation was to happen enables parties more time to deal with the emotional impact of separation as opposed to also worrying about their financial future.
Financial Agreements signed before parties separate can also be useful to promote harmony in marriages due to the complexity of modern lives. For example, parties to a marriage may want to protect assets that are gifted or inherited from their respective parents due to the fact that such assets were the result of the work of their parents during their lifetime. It is common for parents of parties to a marriage to seek that the parties enter into a financial agreement before the gift or potential inheritance is made. In addition to potential gifts or inheritances, parties to a marriage may want to keep any assets owned by each of them before the relationship started if the marriage breaks down. Dealing with these issues in a financial agreement will enable parties to move forward with their relationship without the concern about what will happen to assets brought into the relationship by each of them or gifted to either of them.
What Is Required For A Financial Agreement To Be Binding?
There are very strict legal requirements for a financial agreement to be binding. These legal requirements are:
- That the agreement is in writing;
- That the agreement is signed by the husband and wife;
- That the husband and the wife have each received independent legal advice from a qualifed Australian legal practitioner about the agreement and how it affects their respective legal rights;
- That the husband and the wife each receive a signed statement from their respective legal pracititioneer stating that the advice was provided before the agreement was signed;
- That a copy of the signed statement of legal advice is provided to the other party or their respective lawyer; and
- That the agreement has not been termninated or set aside by a Court.
If any of the above requirements have not been met then the agreement will not be binding unless a Court allows for it to be binding despite the requirements not being strictly followed. There is no guarantee that a Court will allow for the agreement to be binding when the requirements have no been complied with.
What To Do If You Are Considering Entering Into A Financial Agreement?
Here are some tips if are considering entering into a financial agreement:
- Always discuss the matter with your husband/wife about the possibility of entering into a financial agreement;
- Obtain advice from a qualified family lawyer to discuss how the agreement can be drafted and the terms of the agreement;
- Obtain advice from a financial planner/accountant about your financial goals and how such goals can be affected by a separation;
- Obtain advice from estate planning lawyer about your how your finances are structured for taxation purposes or if you were to pass away and the impact of their advice if you and your husband/wife were to separate;
- Always ensure that a financial agreement is never rushed, allowing for both you and your husband/wife to carefully consider the terms of the financial agreement and to obtain all necessary advice.
Financial Agreements require careful consideration and you should only seek legal advice from experienced and qualified lawyers who specialise in family law.
WHERE TO NEXT?
Taking the next step and contacting a family lawyer can be scary. Our lawyers will make you feel comfortable so you can talk about your situation. But first, ask yourself, Do I really need a lawyer?