Having a Binding Financial Agreement provides advantages and a way forward for both parties in the event of a marriage or de facto relationship breakdown.
There are significant risks that may have a detrimental affect on you if a Property/ Financial adjustment is not documented in writing as early as possible after separation.
It is a common situation that you’ve managed to reach agreement on how you’re going to divide your assets. You may be happy with the outcome, so too the other party is happy. It is understandable that once agreed that you don’t want to rock the boat and upset the other party and you want to keep the relationship amicable. However in many cases things change and people regret earlier decisions.
A likely scenario is:
- People hear from others that they ‘should have got more’ or are entitled to more.
- Financial circumstances change and people sometimes then feel they need access to more money or property.
- People re-partner and new partners, relatives, friends and neighbours, often will all have something to say about your property settlement and may try to influence what has already bee agreed.
Any one of these things, could have you facing a situation where your partner decides later to change your “informal” verbal property settlement agreement.
People on the friendliest of terms, will still look after themselves first and if they think their financial circumstances need it and they know the property settlement agreement reached, is not legally binding, then they may want more later.
The best time to get your former partner to agree to make the property settlement you have reached final, binding and enforceable, is:
- when you both have just decided on how the property will be divided;
- when you are still on reasonable terms.
If you both are prepared to make the property settlement you have agreed to final, then it should be easy to get your agreement into either Consent Orders or a Binding Financial Agreement.
If your former spouse doesn’t want to have Consent Orders or a Binding Financial Agreement, then you may want to ask why not – are they hiding something or hedging their bets to keep options open for the future.
If you reach agreement but want to keep things informal (without Consent Orders or a Binding Financial Agreement), you can be taking a big risk. Are you a gambler?
If you agree, why not put it in writing and get it legally enforceable, so there will never be any misunderstanding or attempt by one person to change things, if their circumstances change.
It would be nice to be able to rely on your former spouse’s word, but you are no longer together and the only thing you can have complete trust in, in relation to something as serious as your property and financial future, is a Court Order.
You must also remember that if your property settlement agreement is not legally documented you will not be able to:
- avoid paying stamp duty on the transfer of a house, land or unit; or
- use Capital Gains Tax Rollover relief provisions.
Can a Binding Financial Agreement be Set Aside?
Yes, by a court, if:
- There is evidence of fraud (may include a failure to disclose assets or liabilities at the time the agreement was made).
- The agreement was entered into solely for the purpose to defraud or defeat a creditor or was entered into with reckless disregard to a creditor’s interests.
- One party is experiencing hardship due to the agreement or in relation to a child of the parties.
- The agreement is found to be void or unenforceable. This could be due to mistake, public policy, misrepresentation, one party was under duress at the time of execution, there has been a breach of the agreement or unconscionable conduct.
- The agreement is deemed to be impractical due to a change in one or both of the party’s circumstances.
- There is an issue with superannuation, for example: the agreement provides for a superannuation interest that cannot be split.
Calvin Nelson have Family Law Accredited Specialists that will provide you expert advice, specific to your unique situation on Binding Financial Agreement advantages and disadvantages. Contact Calvin Nelson at our office in the Hills District or Parramatta/Auburn area.