Financial Agreement During Marriage
A pre-nuptial agreement is an agreement signed before you and your partner are married, and sets out how you and your spouse will divide your assets if you were to separate. This type of agreements can also be signed when you and your partner 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 each of the parties will live, how each party will manage their living expenses and the significant emotional strain of the marriage breakdown.
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 each party’s financial position if separation was to happen enables parties more time to deal with the emotional impact of separation.
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. Parties to a marriage may also 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 avoid the concern about what will happen to assets brought into the relationship by each party or gifted to either of them.
What Is Required For A Financial Agreement To Be Binding?
There are strict legal requirements for a financial agreement to be binding. These 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 qualified 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 practitioner 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 terminated 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 not 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 die 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. Contact Armstrong Legal.