The discussion of financial issues can sour any relationship. Some may choose to navigate any such issues by agreeing with their partners or spouses as to how financial matters in the relationship should be dealt with. In Australia, you can choose to formalise this financial agreement under the Family Law Act 1975 (Cth). A Binding Financial Agreement allows parties to enter into financial agreements that are legally binding to protect the financial interests of those parties and for the smoother administration of any property disputes.

What relationships do binding financial agreements cover?

Binding financial agreements cover more than just marriages. They also extend to cover de facto relationships. Under both types of relationship, you can enter into a binding financial agreement before, during the relationship, or upon its dissolution.

How to ensure your financial agreement is binding

To make your financial agreement binding, each party must first seek independent legal advice from a legal practitioner about the effect the agreement will have on them as well as the advantages and disadvantages of entering that agreement. Having done that, both parties must then obtain a signed statement from their practitioner stating that they have been provided legal advice. A copy of this signed statement must then be delivered to the other party. Finally, you must ensure that all parties to this agreement sign it. If any party failed to obtain legal advice, a signed statement, or a copy of the other’s signed statements, a court may still find the financial agreement binding if it would be unjust or inequitable not to make it binding.

Terminating a binding financial agreement

The binding financial agreement may only be terminated if there was a provision to that effect in another financial agreement or by a written agreement to terminate. To terminate the binding financial agreement, parties must first obtain independent legal advice from legal practitioners, a signed statement that they received such advice, and provide a copy of that signed statement to the other party. Once that is complete, all parties to the original financial agreement must sign the termination agreement. As with the process of creating a binding financial agreement, a court may make the termination agreement binding regardless of a party’s failure to complete the above steps if it thinks it unjust or inequitable not to make it binding. If you have any questions about setting up or terminating a binding financial agreement, come in and speak to a member of our team, or send us an email.