Deciphering Financial Agreements in Relationships

Jan 6
17:55

2024

Marte Latim

Marte Latim

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Understanding financial agreements in relationships, particularly in the context of same-sex and de facto relationships, is crucial. Previously, the dissolution of such relationships often led to protracted and tiresome litigation in the Supreme Court. However, the introduction of section 90UD of the Family Law Act 1975 has significantly changed this scenario. This provision allows individuals in de facto relationships to agree on a fair distribution of assets and financial resources post-separation. This development has brought de facto agreements on par with those enjoyed by married couples, ensuring equal rights for same-sex relationships, a move applauded by many gay rights groups.

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Crafting a Binding Financial Agreement (BFA) Post-Separation

In the event of an irreparable breakdown of a de facto or same-sex relationship,Deciphering Financial Agreements in Relationships Articles section 90UD of the 1975 Act outlines the steps necessary for a court to establish and enforce a binding financial agreement (BFA). These steps include:

  • Both parties must seek professional and qualified legal advice. This ensures that each party's unique situation is assessed and legally addressed. If the agreement appears grossly unfair, the legal advisor will highlight this to the concerned party, who can then proceed to sign only after fully understanding the implications.
  • A certificate from the relevant legal professional must be obtained, confirming that the above requirement has been met. This certificate should be included as an 'annex' to the main legal document constituting the BFA.
  • The BFA must specify the extent of any relevant spousal maintenance to be provided.
  • The BFA must be signed by both parties, with each retaining a copy.

Provided all these steps are followed, the court will not scrutinize the BFA to ensure its fairness. The court would only tend to set a BFA aside if there were fundamental flaws with the documents, such as fraudulent creation. It's also important to note that a person can only enter into a BFA if they are not already party to such an agreement with another person.

Faster Resolution Post-Separation

This type of post-nuptial agreement should facilitate smoother handling of financial matters. While the creation of the binding financial agreement may require some time, once a settlement is reached, the BFA provides a quicker resolution to the question of asset distribution. Of course, the speed of reaching an agreement largely depends on the communication between the parties, which may not be as smooth post-separation. However, resolving asset and financial issues in this manner is likely to be more prudent and cost-effective.

Regardless of the course of action chosen by members of a de facto relationship post-separation, Australian law now provides them with these options. The days of limited avenues for settling such matters are over. De facto agreements now exist to facilitate a quicker resolution to the division of assets and financial resources.