There are generally two ways in which parties can settle their financial affairs: by filing Consent Orders or entering into a Binding Financial Agreement.
A Consent Order can be made by the Family Court of Australia setting out the terms on which the parties agree to resolve their dispute concerning their financial affairs. We mention in passing that if Consent Orders are not deemed by the Court to be fair and reasonable, the Court has the power to decline to make the orders. If you would like our assistance in preparing these orders, please contact us.
A Financial Agreement is a written agreement governed by the provisions of Parts VIII or VIIIAB of the Family Law Act. Pursuant to s 90D of the Family Law Act, a Financial Agreement endeavours to regulate the division of property, finances, spousal maintenance and debts after a marriage breakdown. In order for the financial agreement to be legally binding on the parties, it must be signed with both parties confirming to having obtained legal and financial advice prior to signing the agreement.
Financial Agreements do not deal with parenting matters, child support or child custody
Death of a party to a financial agreement
A Financial Agreement is binding even after the death of a party to the agent. Under s 90UK of the Family Law Act, a Financial Agreement surpasses the life of a party after death and becomes binding upon the legal personal representative of the party. If a separation declaration has been made pursuant to s 90UF by a party, and they die, the obligations continue to bind the estate.
In order to undo a Financial Agreement, the agreement must be specifically revoked
In NSW you can include a deed of release in a financial agreement, under the Succession Act 2006 (NSW). The release may assist the party avoid a claim against the others estate, if no proper measures were included in the deceased persons will. The release needs to be approved by the Supreme Court of NSW before it takes effect. However, the release is typically considered adequate evidence of a party’s intention to relinquish their right to a claim. In other Australian Sates, an agreement to unwind a party’s right under the family maintenance legislation would be a non-binding statement of intention.
Financial agreements and maintenance
Pursuant to s 90E and s 90H of the Family Law Act, parties are expected to assign a numerical value to an amount specified as maintenance. These provisions deal with the requirements at law to uphold maintenance for a child or spouse. Despite various provisions which claim that a party cannot not seek spousal maintenance from each other, that provision can be overridden by the Court if it is satisfied that one party must obtain a means tested benefit (i.e. Centrelink). These provisions are made in light of public policy which dictates that it is a requirement that a party ought to make appropriate spousal maintenance payments which cannot be contracted out of.
Terminating a financial agreement
Pursuant to s 90K of the Family Law Act, the Court has the power to set aside a financial agreement in circumstances when the court is satisfied, for example, that a party to the agent engaged in or if that agreement was fraudulent and/or unconscionable conduct (including non-disclosure of a material matters). If the agreement imposes a hardship on a party, the court will likely be satisfied to set aside the agreement.
To terminate a financial agreement, the parties can either sign a new financial agreement which outlines provisions to terminate the old agreement or, alternatively, sign written document that is specifically designed to revoke and terminate the agreement (see: s 90J and s 90UL).