In brief - What is the purpose of a binding financial
Binding financial agreements are one way in which people seek to
protect or quarantine their assets prior to, during or after a
relationship, whether that relationship is a de facto relationship,
same sex relationship or a marriage.
Certainty in the event of separation
A binding financial agreement allows parties to agree on what
the division of assets will be in the event that they separate. It
is binding on the parties unless it is set aside by a court and
gives parties to a relationship certainty about what they will
receive in the event that they do separate. The benefit is that
these decisions are made when the relationship is happy and
harmonious, rather than clouded by anger or bitterness.
Consider all the circumstances carefully
Parties must be aware that if they enter into a binding
financial agreement, the court is excluded from interfering with
the terms or changing the provisions of the agreement. If people
are considering entering into such an agreement, they should ensure
that they consider all of the circumstances which are likely to
have a financial impact on them during the relationship and be very
well prepared and informed prior to signing the agreement. There is
a real danger that a binding financial agreement may result in an
unjust division of property on a relationship breakdown. A
person's circumstances at the beginning of the relationship are
not the same as their circumstances 20 to 30 years later.
It is sensible to consider entering into one of these agreements
if entering a relationship, particularly if you have
pre-relationship assets. Often people will use them to protect an
expected inheritance. They can be used as part of a comprehensive
Reviewing binding financial agreements
It is advisable to review a binding financial agreement on the
occurrence of significant events such as the birth of children,
purchase of property or the receipt of an inheritance or gifts from
family members. This will go some way towards protecting both
parties to the binding financial agreement and guarding against the
agreement being set aside under one of the provisions of the
Family Law Act 1975 (Cth) which allows them to be set
Setting aside a binding financial agreement
A binding financial agreement can be set aside where:
It was obtained by fraud
It is void or unenforceable (that is, it was made under duress
or by mistake, or undue influence was involved)
It is impracticable for all or part of the agreement to be
There has been a material change in the care of a child,
leading to hardship if the agreement remains
A party has been engaged in unconscionable conduct when making
the binding financial agreement (where one spouse is at a
disadvantage, the other spouse knows they are at a disadvantage and
the agreement runs contrary to good conscience)
The above grounds for setting aside a binding financial
agreement can be quite vague and open to interpretation by a court.
The courts have been prepared on a number of occasions to set these
agreements aside, particularly if the court considers that they are
Seeking advice from a family law specialist
Before you consider entering into a binding financial agreement,
it is important that you obtain detailed advice from a family law
specialist who will be able to advise you on whether and what type
of binding financial agreement is appropriate in your individual
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The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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