Binding Financial Agreements Explained

financial-agreements

When it comes to the breakdown of a relationship there must be a fair and equitable division of assets and debts. Legally, this is called a binding financial agreement, though it is often known as a ‘pre-nup’. Family lawyers can help in establishing a pre-nup and in advising about the division of assets if there is none.  In some cases this can be done quite easily between two people who separate amicably, but very often it has to be taken to court for a legal decision to be made as the two parties cannot agree on a fair division.

If it can be settled out of court it avoids the cost of court proceedings and just as importantly saves time and stress. Court proceedings are known for their slow movement forward and this can certainly add to the stress of the whole business of divorce. However, the reality is that a divorce is often accompanied by bitter feelings, which get in the way of any decisions that could be considered fair.

Parties that cannot reach an agreement must apply to the court for financial orders to settle their affairs and this will include both dividing up property and payment of spousal maintenance. The same law applies whether the parties are married or in a de facto relationship.

If an agreement is reached without going to court, the parties can have it formalised by applying to the Family Law Court for consent orders. This will then be a binding financial agreement between the two. If the assets are not complex, this could be the best way to go. But if there is much property and other assets then going to court can provide a fairer distribution. It is worked out taking into account the unique individual circumstances of each case.

The divorce has to be final before the property adjustment application can go ahead, but there is a time limit on applying. For married couples this is 12 months after the divorce has been finalised, while for a de factor relationship it is 2 years. This is not to say that an application cannot be put forward after those dates, but you have to get special permission by the court to do so and this is not always granted, so it is far better to ensure you work within the time limits.

It is often wise to seek the counsel of a lawyer who is experienced in divorce and binding financial agreements. A lawyer can explain your rights and responsibilities in a way that is easy to understand and may be able to help both parties come to an agreement so they don’t have to go to court, thus saving the extra cost and stress.

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