I’M ABOUT TO GET MARRIED. DO I NEED A FINANCIAL AGREEMENT?

There is no right or wrong answer to this. Some of the common reasons people might enter into a binding financial agreement before the commencement of a marriage may include:

1. you are bringing substantial assets into the marriage;
2. you are likely to receive a substantial inheritance at some point in your marriage;
3. you have a particular asset you want to protect;
4. you want certainty of outcome if your marriage breaks down; or
5. you have children you want to provide for in the event of a marriage breakdown.

Entering into a BFA before marriage is often called a prenuptial agreement or “prenup”), which you can read more about here.

Can we get a BFA if we’re already separated?

If you are separated or divorced with no prior arrangements, you can still enter into a BFA to secure the division of your finances. Contact us today to find out more.

Entering into a BFA after separation is the most common. It sets out how you will divide assets now that the relationship is over (as opposed to a prenup before the relationship, which requires future thinking). The BFA after the separation is more final because you know exactly what assets you have and how they will be split. If you can’t reach an agreement, you may consider going to court over property litigation.

Because of its specificity, the court is not as involved (compared to processes like Consent Orders). The court only ever gets involved over disagreements with a BFA, which often don’t occur because the agreement outlines how you will resolve any disputes, with ‘backup’ clauses to ensure the right actions are in place to fix issues.

Skip the queue! BFA’s do not go through the court system. With a BFA, the court is not concerned in ‘fair’ or equitable distribution, but more with the agreement itself. This can be of benefit to you and your ex-partner, as it allows the process to be over much quicker.

Benefits of a BFA

• Specificity of terms, so you have more certainty in the outcomes of the agreement.
• Save time as you don't have to go through extensive court process
• There is more certainty with a BFA. Court’s are unlikely to get involved.
• If both parties are happy, there’s no further interference.
• Resolve quicker and move on.
• Stamp duty and other possible exemptions on property transfer etc.

WHAT IS THE DIFFERENCE BETWEEN CONSENT ORDERS AND A BINDING FINANCIAL AGREEMENT?

Consent orders and BFAs are the two options separating couples have for making their property and financial agreement legally binding. There are substantial differences between the two.

1. What can be included?

   Consent orders can include arrangements for your children, whereas BFAs are for the purpose of property and financial matters only.

   
   

2. When can they be made?

   Consent orders can only be made after separation. BFAs can be entered into before, during or after a marriage or de facto relationship.

   
   

3. Legal advice

   It is not compulsory to receive legal advice for consent orders, though it is recommended. It is, however, a strict requirement for both parties when entering into a BFA. A BFA is not valid if either party has failed to obtain independent legal advice.

   
   

4. Just and equitable

   Consent orders are lodged at the Family Court of WA, which will then determine whether the proposed property and financial orders are just and equitable.

   
   

BFAs, on the other hand, are not lodged at the Family Court at all. A BFA is essentially a legally binding contract between you and your partner or ex-partner.

DO I NEED A LAWYER IN THIS PROCESS?

In order for your BFA to be legally binding, both parties need to obtain independent legal advice, which is usually confirmed in a letter. This letter sets out the advantages and disadvantages of entering into the BFA, and its effects on your legal rights. Each party’s lawyer also needs to sign a certificate of independent legal advice, which must be attached to the back of the BFA.

Getting started - What we need

• An overview of your financial situation
• Breakdown of assets and liabilities - ownership, estimated values etc.
• Contributions of the relationship - who did what?
• Agreement of the proposed division (negotiated and accepted prior between you and your ex-partner through reasonable discussion).

case study

Walter v Ivanov [2018]

In this case, the parties met online. The husband was 67 years old and the wife was 36 years old, from a European background and living overseas.

The husband was a wealthy Australian property developer with assets worth about $18 million dollars.

At the start of the relationship, Mr Walter told the wife that she would need to ‘sign an agreement’ if they were to get married, and that his money was for his children, from his previous marriage.

Ms Ivanov agreed and moved to Australia. The couple planned their wedding and Ms Ivanov invited her family from overseas to attend. Eleven days prior to the wedding, Mr Walter presented Ms Ivanov with a BFA and told her that if she did not sign the agreement, the wedding would be called off. She signed the BFA four days prior to the wedding.

The terms of the BFA provided that the wife receive a payment of $50,000 after at least three years of marriage.

The parties separated about four and a half years later. The wife sought relief from the Federal Circuit Court of Australia seeking an order that the BFA be set aside and that she receive a much higher amount.

Ms Ivanov was successful in her application and the court found the financial agreement should be set aside for unconscionable conduct.

CAN MY PARTNER AND I HAVE THE SAME LAWYER PROVIDE A CERTIFICATE OF INDEPENDENT LEGAL ADVICE?

No. “Independent legal advice” means that you and your partner need to have different lawyers advise you about the BFA.

CAN I INCLUDE CHILDREN’S ISSUES IN A BINDING FINANCIAL AGREEMENT?

No. BFAs are only for property and financial matters.