Financial Agreements Freqently Asked Questions

My partner and I will share all of our household and living expenses but he earns far more than I do. Does the agreement have to state our expenses are to be divided evenly?

Answer: No, it is probably better to say that until such time as you become pregnant or a mother and unable to work, your contribution to expenses should be in proportion to your earnings - if he earns twice as much he puts in twice as much, unless he is supporting kids from a prior relationship, for example, in which case you might say he puts in four dollars to your three or something similar or you can just leave it as "in proportion to earnings" so that if either of you become unemployed, the other does the providing.

If you have a co-habitation agreement do you then need a 90B pre nup if you are getting married or will the cohab suffice?

Answer: If you make the de facto agreement and then decide to marry it is not be the same as making a 90b pre nuptial agreement. If you marry you have to sign a new agreement. Section 90SC(1) says that the new laws cease to apply if the parties to a de facto relationship later marry one another.  In those circumstances, the more familiar provisions of the Act would govern the now married couple’s relationship.

The difference between the two agreements rests on the following technicality: there are rights and privileges which flow from marriage and these are something the commonwealth can regulate under the constitution.  De-facto relationships are a state power and some states allow the commonwealth to regulate them under the family law act but others don't.

If I make a Pre nuptial agreement and things change after we are married like we have children, how will this affect the viability of the agreement? Can I make another agreement under sect 90C?

Answer: Yes, but it must be completely fresh and with new certificates of advice… and of course agreed to by your partner. It is under a different section of the Act, 90C instead of 90B.

If I have an existing agreement with my wife, can we make another agreement and supersede our first agreement?

Answer: Yes, but it must be completely fresh and with new certificates of advice… and of course agreed to by your partner.

When we agree about the division of property does that take effect immediately or only if we separate?

Answer: Depends how you write the agreement, although except for tax and asset planning reasons it would be odd for property to be divided if you were still happy together. We do sell a kit for use under s90C Family Law Act for exactly this purpose, but if you are trying to protect assets this is only one part of your strategy, and you should consider setting up a trust fund. Our "trusts for newbies" kit shows you how. We can, using our review service, arrange you an hour's financial advice (this does not involve selling you any financial products) for $150 or specialist commercial legal advice for the discounted rate of $220 per hour.

My husband is a (high risk occupation) and I worry that someone may sue us if things don't go to plan. If we make a Financial Agreement and put the home in my name so its protected from creditors, do we have to separate before the assets are protected?

Answer: No, as long as there are no existing creditors. You cannot defeat or "delay" existing creditors but "potential" creditors are another story, and they take you as they find you. However if you are trying to protect assets this is only one part of your strategy, and you should consider setting up a trust fund.

If my husband and I separate and the house is transferred to one of us do we have to pay capital gains tax or transfer fees and the like?

Answer: Fees are only nominal. For example in WA where nominal stamp duty is $30. In Victoria there is a registration fee of $60 on most documents filed in the Land Registry. Apart from that the Act specifically exempts transactions from tax and stamp duty.

Do I have to be married before I can enter into a financial agreement with my partner?

Answer: No, a prenuptual agreement can be made before you are married if you have set a date, and a defacto agreement under the new part VIII AB of the family law Act can be made if you do not intend to marry. Same sex couples can also use Part VIII AB.

We don't understand how we would deal with maintenance because we haven't got any children and we can't really crystal ball the future. What should we do about this in the agreement?

Answer: Leave it out. If there's a dispute, you would hope that being sensible people something could be negotiated or mediated in order to avoid a trial. There are compulsory mediation sessions as part of the dispute resolution process.

Can there be different financial consequences depending upon who ends the relationship?

Answer: The agreement only specifies that the division of Assets and liabilities shall be (what ever you decide) if the relationship ends. It makes no distinction if one party or the other ends the relationship. I would think you would need to be very careful including such a provision in an agreement.

What format is the document in (Word, PDF, etc.)?

Answer:Both if you prefer. Most people use the Word version and a limited number the PDF. Many people don't realise (even Mac users) that a pdf can be edited.

I’ve read that the document is not legal if all assets are not revealed. Is this true? I’m not trying to withhold knowledge of assets, but I have heard that these have been thrown out if everything was not noted.

Answer:There is very little history at all with financial agreements being thrown out (or more correctly set aside) even though they have been available to married couples since 2000. Financial agreements for de facto couples have only been available since 1st March 2009 so there are no documented challenges in the court system.

The parties have a duty of disclosure to the court as well as each other. If one party tries to hide Assets or liabilities that effect the other party the party could go to court and argue to have the agreement set aside. It is important to note that a Financial Agreement is essentially a contract. All contracts can be set aside in certain circumstances, for example, where agreement has been obtained by fraudulent means.

Section 90K of the Family Law Act sets out the circumstances in which a Court may set aside a Financial Agreement; they are:

1. fraud, including material non-disclosure (eg. failure to disclose the existence of or the true value of an asset); or

2. a party to the agreement entered into the agreement for the purpose of defrauding or defeating a creditor or creditors of that party; or

3. the agreement is void, voidable or unenforceable (ie. the agreement must be prepared properly and in accordance with the legislation); or

4. circumstances have arisen since the agreement was made which make it impossible or impracticable for the agreement, or a part of the agreement, to be carried out; or

5. since the making of the agreement, a material change in circumstances has occurred that was not dealt with or foreshadowed in the agreement (relating to the care, welfare ad development of a child of the marriage) and, as a result of the change, a party to the agreement will suffer hardship if the Court does not set the agreement aside; or

6. a party’s conduct in the making of the agreement was, in all the circumstances, unconscionable;