You can check in my other post, how financial agreements can help sort finances, if unfortunately, things don’t work out between you and your partner.
Financial Agreements are legally binding on both the spouses for enforcement. The financial agreements can be made before, during or after the start of a relationship. It includes everything a household has as assets, estates, finances and inheritances.
Types of Financial Agreements
- Prenuptial Agreement: This financial agreement is made before a relationship begins, which states what comprises in the matrimonial asset pool if the couple think of separating in future.
- Postnuptial Agreement: This financial agreement is made after the relationship commences and comprise of current and future financial arrangements between the couple.
- Cohabitation Agreement: Cohabitation Agreement is done between the couple when they are entering a relationship of living together. This agreement mentions about the couple’s intention and contribution to the joint assets of the household.
- Separation Agreement: The separation agreement is done between the couple while separating from the relationship. Separation agreements are useful to set the guidelines on how to split and manage finances separately.
- Divorce Agreement: The divorce agreements are drawn when couples decide to divorce. The couple need not wait for the divorce proceedings to begin to prepare an agreement. Similar to the separation agreement is contains how finances are to be handled during and post-divorce.
What do Financial Agreements Cover?
Financial agreements cover gamut of financial issues to smoothen the transition from separation to divorce independent living of both the partners. Financial agreements if done in good faith and sensibly, can ensure a stable financial life to both the partners. I wish, someone told me this before!
A financial agreement, generally, covers priority issues of a family. Such as:
- How child support and other child care expenses are to be met
- How matrimonial assets are divided in a fair way
- Assessing future needs of both the partners and providing for the same
- Spousal maintenance if any, is to be mentioned
- How inheritances, antiques, gifts brought in by both the partners are to be treated
- How any other expenses are to be met by both the partners
- How and when superannuation should be shared
Process of Preparing Financial Agreements
Financial agreements are to be prepared with utmost care and discretion to make it a fair deal to both the partners. If financial agreements don’t meet the guidelines set by the Family Law Act, then it cannot be applied for gaining Consent Orders from the court to make it enforceable.
A step-wise guide on how prepare financial agreement:
Step 1: As mentioned above the partners must draw their current and future financial needs as accurate as possible and agree on terms of sharing the assets and debts, mutually.
Step 2: If the couple cannot agree on amicable terms to share the finances and properties, they can take the assistance of mediators or collaborative lawyers to find a common ground to discuss how properties can be divided fairly.
Step 3: The agreement must be prepared under expert legal guidance of two independent family lawyers, who advice both the partners on benefits and drawbacks of entering such an agreement. After which, they sign the agreement.
Step 4: Only after completely understanding the consequences of getting into a financial agreement and agreeing to it, the partners must sign the agreement.
Once the partners sign the agreement, it becomes legally binding. The family court can grant Consent Orders after looking over at the financial agreement. The Consent Orders are orders from the court directing the parties to carry out the financial agreement.
After signing the financial agreement, none of the partners can apply to court for its mediation to settle the finances and property division for them.
Termination of Financial Agreement
If you wish to end the agreement, it is easy too. A financial Agreement can be terminated as and when deemed required by both the parties on mutual basis.
A new agreement can be drafted provisioning the termination of the old agreement.
A document, in writing can be signed stating the old financial agreement stands cancelled.
Both the parties should get independent legal advice from family lawyers to understand the consequences of cancelling the old financial agreement and getting into a new one. A letter from the legal advisors must be attached with the new financial agreement.
Check out the video, explaining financial agreements: