As divorce lawyers, we are often asked whether it is necessary to have a lawyer to act in relation to Financial Agreements.
A Financial Agreement, or more correctly, a Binding Financial Agreement, is one way that a married, or de facto couple, can formalise how they want their property to be treated in the event they separate, or in the event that their relationship has already come to an end, to formalise an agreement reached about what will happen with their assets and liabilities.
To put it bluntly, you need a lawyer for your Financial Agreement, because the law says you have to have one. The Family Law Act sets out a number of requirements that must be met to make a Financial Agreement binding, and one of those requirements is as follows:
- before signing the agreement, each spouse party was provided with independent legal advice from a legal practitioner about the effect of the agreement on the rights of that party and about the advantages and disadvantages, at the time that the advice was provided, to that party of making the agreement; and
- either before or after signing the agreement, each spouse party was provided with a signed statement by the legal practitioner stating that the advice referred to in paragraph (b) was provided to that party (whether or not the statement is annexed to the agreement);
Each party must have obtained independent legal advice prior to signing a Financial Agreement to comply with the legislation, and for the Financial Agreement to become binding.
In short, an informal agreement (one where the parties have not obtained legal advice) is simply not binding on either party and in no way protects anyone.
Even if it was not necessary to obtain legal advice prior to entering a Financial Agreement, it would still be certainly worthwhile. Spending money and time on decent and thorough legal advice when negotiating and preparing a Financial Agreement, can save you significant sums of money in the long run, as well avoid a lot of stress and uncertainty.
While Financial Agreements are a legitimate way to formalise your property settlement, they can also be very risky. There are a number of circumstances where the Court can set aside a Financial Agreement and an expert family law lawyer can help you avoid these common pitfalls. One of the most common reasons that Financial Agreements are set aside by the Court is as a result of the agreement being technically deficient. Expert family law legal assistance is essential to make sure the Financial Agreement strictly complies with the legislation.
There are also a number of other circumstances in which a Financial Agreement can be set aside by an order of the Court. You can find information about these circumstances, and Financial Agreements generally, on the Cairns Divorce Lawyers Website.
It is recommended that before you decide to move ahead with a Financial Agreement, you meet with your family law lawyer first, to look at all of your options as well as the advantages and risks, and legal costs, of each option in light of your personal circumstances.