Binding Financial Agreements: New Bill Seeks to Clarify Requirements
Whilst the existence of a binding financial agreement between parties in a relationship can save considerable time and ambiguity in the event of a separation, the law surrounding the enforcement and validity of binding financial agreements has been a source of confusion and difficulty for some time.
The introduction of the Family Law Amendment (Financial Agreements and Other Measures) Bill 2015 on 25 November 2015 aims to resolve this uncertainty. In particular, the amendments are designed to reinforce the binding nature of financial agreements and encourage parties to privately resolve their financial disputes - thereby avoiding the need for Court involvement.
What is a binding financial agreement?
A binding financial agreement is a private agreement made between two parties. It allows the parties in a marriage or de facto relationship to make their own arrangements regarding their property and financial matters, including spousal maintenance, if they were to separate.
In the past, having both parties sign the Agreement was the only legal requirement in preparing a binding financial agreement. However, under the new Bill, new requirements have been introduced that will make the process of preparing financial agreements a little more formal and rigid, as well as stipulating when they can be enforced or set aside by a Court.
What are the main changes proposed?
The main changes we will see under the Amendment Bill include:
- Clarification of the legal requirements
One of the main aims of the Bill is to clarify the conditions that must be met before a financial agreement is held to bind the parties. Under the Amendments, new requirements are introduced which will apply depending on when the financial agreement was entered into (for example, whether it is entered into before the marriage, during the marriage or at the time of separation).
- Clarification of the grounds upon which a court may set a binding financial agreement aside
In particular, the Bill is also focused on ensuring that binding financial agreements entered into at the time of separation, or after a declaration of separation is made, will be harder to set aside than those entered into before a separation declaration is made.
If you would like more information on binding financial agreements and their application please contact our Accredited Specialist in Family Law, Daniela Poletti, on ph: 02 9899 9677.Back