Legal comment from Mark Illidge of Hinterland Lawyers

December 2005

Couples wanting to clarify how their financial assets and spousal maintenance will be dealt with in the event of divorce can enter into a Financial Agreement, also known as a pre-nuptial.  The Financial Agreement legislation is a self-ordering legislation introduced by the Federal Government to enable parties to order their own affairs, without needing to go to the Family Court to resolve disputes. 

There are some particular instances in which they are popular.  If either party brings substantial assets to the union or expects to receive a large inheritance, a financial agreement provides greater certainty, because while the family court allows a contribution weighting to recognise assets taken into a marriage, the longer the marriage lasts, the less weight is given to initial contributions.  If people have divorced in the past they may also wish to minimise the financial and emotional drain associated with any future split. 

To reduce the likelihood of the court setting aside the agreement the couple should ensure that: the agreement is properly drafted, there are no fraud or undue influence or non-disclosure issues, and that they have each received independent legal advice.  It is also crucial that the agreement is updated to reflect changing circumstances.  It could be beneficial to involve your accountant or financial planner in the process.

You should be aware that financial agreements are not able to make binding provisions for custody arrangements for children or child support, as these will always depend on the best interests of a child.  However the court could set aside the financial agreement if there is a material change to the welfare of any children and it would cause hardship to enforce the strict terms of the agreement.

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