At the end of a relationship / marriage the assets, liabilities and Financial Resources will need to valued and tallied. An assessment will need to be made as to who is going to receive what and who will be liable for which debts.
How do you work out what you’re entitled to?
Family Law Act 1975 sets out the basis of determining the division of assets, liabilities and financial resources, in the event of the breakdown of a relationship or marriage.
The process which the Court would go through can be broadly stated as follows:
- Determine the value of the assets, liabilities and financial resources;
- Look at the contributions made by both parties, bearing in mind that there is no presumption of equality of contribution, contributions may not equal in circumstances of e.g. inheritances, gifts, waste;
- The needs of both parties need to be considered, earning capacity, health, who is the primary carer of the children; and
- Finally ensure that the division decided upon is fair and reasonable in the circumstances the particular case
Informal Property Settlement
It is important to realise that just reaching an agreement with your partner, husband or wife and signing various assets over to them, doesn’t mean it’s legally binding.
Any other agreement, is commonly known as “informal property settlement” and is not legally binding. What this means is that your spouse or partner may, at some later time, seek a greater share.
We have acted for clients, that had prior to engaging our firm, entered into informal property settlements, only for their former partners to re-contact them down the track, to seek a further share of the assets. Had a Binding Financial Agreement or Court Orders been made at the time of separation, that situation would never have arisen.
Informal agreements may seem quick and hassle free, at the time, but in the end, may cause you to incur the significant cost and stress of defending a Court application.
We strongly recommend that if you are separating, or considering separating, that you at least get basic family law advice.
Once you have reached an agreement with your partner/husband/wife, you can document that agreement in what is known as an ‘Application for Consent Orders’. The Application sets out the various assets, liabilities, financial resources of your relationship/marriage and provides for a number of Court Orders that you seek the Family Court to make to finalise your financial relationship with each other.
The Court Orders can deal with such things as, sale of property, splitting of superannuation, spousal maintenance and much more. The Application is then sent to the Family Court and the Court will assess the fairness of the settlement, taking into account the matters set out under the Act. If approved the Court, will seal the Orders.
The Family Court has an overriding obligation, under the Family Law Act 1975, to assess whether the Orders sought are fair. If the Court decides the Agreement isn’t fair, they can refuse to seal the Orders.
If this is the case, you can either renegotiate the Agreement or enter into a Binding Financial Agreement.
A property settlement can be done at any time after separation however time to make an Application to the Court runs out, for a married couple, 12 months after a Divorce order is made and for a de-facto couple, 2 years after the date of separation
Binding Financial Agreements
A Binding Financial Agreement is a term that is used to describe a range of agreements that can be entered into by couples before, during or after a relationship, or marriage.
You may have heard these agreements referred to by many names, such as :
- Financial Agreement
- Financial Agreements before Marriage
- Pre-nuptial Agreements (pre-nups)
- Cohabitation Agreements
- Separation Agreements
- Divorce Agreements
It allows a couple to agree on an acceptable division of their assets, liabilities and superannuation in the event of , or upon the breakdown of, their relationship/marriage. A Binding Financial Agreement allows couples to decide upon the division of their assets, liabilities and financial resources without resorting to litigation
It is important to note that an agreement entered into before marriage must be made in anticipation of marriage otherwise the agreement has no effect. It is also important to note that an agreement entered into whilst in a de-facto relationship automatically terminates upon marriage.
Agreements after Separation : Defacto and Marriage
In the case of an agreement which is executed following separation, unlike Consent Orders, once an agreement is reached between the parties, the Court has no role in assessing whether the Agreement is a fair one.
Once the parties have signed the Agreement it is finalised and binding. There is no outside assessment of, or involvement by, the Court and the Agreement is neither seen by, nor filed with the Court.
Formal Requirements of Financial Agreements
For an agreement under the Family Law Act 1975 to be binding, both parties must be independently legally advised. If one party does not receive legal advice, the Agreement will not be Binding.
The Agreement must also contain, in relation to each party to the Agreement, 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, which must be certified in an annexure to the Agreement, with independent legal advice from a legal practitioner as to 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 contains a certificate signed by the person providing the independent legal advice stating that the advice was provided. This advice ought to be given in writing and be given before you sign the Binding Agreement. If such a certificate is not provided by a solicitor then the Agreement will not be binding.
If you are considering marriage, or entering De facto relationship and you are concerned about your assets in the event of a separation, it may be in your interests to get some advice on getting a Binding Financial Agreement.
Commonly known as prenuptial agreements, these Agreements are a way of taking control of the separation process, a way of ensuring that you save a large amount of pain, time and expense. They don’t have to be signed before a wedding, they can be signed at any time during the relationship, and you don’t have to be married for such an agreement.
Couples entering these types of Agreements, especially older couples who have already amassed individual assets, or people who are entering a second or third marriage, are taking a proactive step to safe guard and secure their future . You may have finally met your “soul mate”, but this does not mean you should risk the assets you’ve built up over a life time. Pre-nuptial /De-facto Agreements, provide some much needed certainty, should things not work out.
Since 2000, these Agreements have been legally recognised under the Family Law Act. They are enforceable by a court should the relationship end. They can set out who gets what in the event of a marriage/relationship breakdown, protect inheritance rights for children from a previous marriage or maintenance of either party after separation.
When can a Binding Financial Agreement be set aside by the Court ?
The Family Court has powers to set aside Prenuptial Agreements where either the formal legal requirements of such an agreement, under the Family Law Act 1975, have not been complied with, or there has been some fraud, undue influence or non-disclosure at the time the Agreement was made.
In the case of a Agreement , made before or during, a marriage or relationship, the Court may set aside an Agreement, if there is a material change in the welfare of a party and it would cause a hardship to enforce the strict terms of the Agreement
If you require advice, assistance or guidance in any Family Law matter please call today on (03) 59757611 or Enquire Online.
You can also find further information in our: Children and Family Law – Frequently Asked Questions, Children and Family Law, Family Law Property – Frequently Asked Questions, Child Support and our Articles sections.