Financial Agreements
This is the last instalment as to Financial Agreements. If you missed the first 3 instalments, you can review these articles here.
In the final instalment, William Sloan writes about how Financial Agreements interact with estate planning, foreign agreements, foreign assets and are Financial Agreements binding.
How do Financial Agreements interact with estate planning
Financial Agreements deal with the resolution of financial claims between parties in the event of a breakdown of their marriage or relationship. Financial Agreements do not deal with a situation where one party dies at a time where the marriage or relationship is intact. That situation instead needs to be dealt with via a Will and associated estate planning measures.
How do Australian Financial Agreements interact with foreign agreements
The effect of making an Australian Financial Agreement is to “contract out” of the ability to make a claim in an Australian Court. Whilst Australian Agreements operate, in effect, as a barrier to what would otherwise be potential claims in Australian Courts, there is no such recognition in Australia for foreign Agreements. Parties who have previously lived outside of Australia may have made a foreign Agreement. The foreign Agreement will provide no protection if the parties later form some connection with Australia such as living in Australia or holding assets in Australia. If the parties establish some connection with Australia, then to obtain protection they will need to enter into an Australian Financial Agreement. The terms of the Australian Financial Agreement may, in substance, be similar to the terms of the foreign Agreement.
How do Australian Financial Agreements interact with foreign assets
Australian Financial Agreements operate to prevent claims being made in Australian Courts. If the parties have connections with a foreign jurisdiction such as being citizens of a foreign jurisdiction or holding assets in a foreign jurisdiction, then the foreign jurisdiction may not recognise the Australian Agreement. If there is a continuing connection with a foreign jurisdiction, then it is worthwhile getting advice from a suitably qualified lawyer in that foreign jurisdiction as to matters including:
- Whether the foreign jurisdiction will recognise the Australia Agreement;
- Whether an additional Agreement can be made in the foreign jurisdiction (mirroring the terms of the Australian Agreement).
Are Financial Agreements binding
The legislation under which Financial Agreements are made contains provisions that allow parties who have made a Financial Agreement to later seek to set aside the Agreement. Grounds on which Courts have power to set aside Agreements include:
- the Agreement was obtained by fraud;
- the Agreement was entered into for the purpose of defeating a creditor;
- a party to the Agreement engaged in unconscionable conduct in respect of the making of the Agreement.
Given the potential for an Application to be later be made seeking to set aside the Agreement, great care needs to be taken in respect of the making of Financial Agreements. For example, adequate disclosure needs to be made and genuine negotiations need to take place.
Further information
This guide is intended to provide general introductory information in relation to Financial Agreements. The legislation under which Financial Agreements are made is highly complex.
If you would further information about Financial Agreements, please contact:
William Sloan on 6380 3900 or email william.sloan@kimwilson.com.au.
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