When people start discussing a Financial Agreement, one of the first questions is often:
“How much will it cost?”
That reaction is understandable. However, it can sometimes distract from a much more important question:
“What am I actually protecting?”
Many people approach a Financial Agreement believing they simply need a document prepared and a solicitor to sign a statement of advice. What is often overlooked is that a Financial Agreement can significantly affect future property rights, financial claims, and long-term financial security.
The real issue is whether the agreement will actually provide the protection and certainty it was meant to provide if it is ever challenged.
At Shan Lawyers, we often remind clients that a Financial Agreement is not merely a document. It is a forward-looking legal arrangement intended to clarify how financial matters will be handled if a relationship later breaks down. In practical terms, it allows parties to make informed decisions in advance about the division of property, financial resources, liabilities, and other important financial interests.
Understanding the Purpose of a Financial Agreement
The purpose of a Financial Agreement is to reduce uncertainty. Rather than leaving future financial outcomes to be determined at a later stage, the parties can set out their agreed position while circumstances are clear and intentions can be properly recorded. This can be particularly important where one or both parties wish to protect existing assets, preserve family wealth, safeguard business interests, or clarify responsibility for debts and financial commitments.
For that reason, clients are often reminded that a Financial Agreement is more than an administrative formality. It is a legal arrangement designed to provide structure, certainty, and protection against future property claims if it ever needs to be relied upon.
A Financial Agreement can be entered into at different stages of a relationship under the Family Law Act 1975 (Cth), which permits financial agreements to be made:
- For Married Couples:
- before marriage under s 90B,
- during marriage under s 90C, and
- after divorce under s 90D.
- For de facto couples, equivalent agreements may be made:
- before entering into a de facto relationship under s 90UB,
- during the de facto relationship under s 90UC, and
- after the breakdown of the de facto relationship under s 90UD.
Many people view Financial Agreements as documents that are signed, stored away, and never revisited. In reality, they can have significant consequences if circumstances change in the future.
For many couples, the purpose is not to anticipate separation. Instead, it is to create clarity, reduce uncertainty, and establish a framework that helps avoid future disputes.
A Binding Financial Agreement can also provide greater certainty about how financial matters may be managed if circumstances change, allowing parties to make informed decisions while their intentions are clear and expectations are aligned.
Why Financial Agreements Require Proper Legal Advice
Many people are surprised to learn that independent legal advice is not merely a procedural requirement. The advice forms an important part of the overall process.
A Financial Agreement can affect a person’s legal rights in significant ways. Before signing, it is important to understand not only what the agreement says, but also what rights may be affected, what risks may exist, and whether alternative outcomes could arise if no agreement were entered into.
The value of legal advice is not in obtaining a signature, but in ensuring that a person understands the practical and legal consequences of the decisions they are making.
Obtaining proper legal advice for Financial Agreements allows people to make informed decisions based on their own circumstances rather than assumptions.
The Risks of Focusing Only on Cost
Focusing only on the lowest cost can compromise the protection that a Financial Agreement is intended to provide.
A Financial Agreement is not simply about producing a signed document. Its purpose is to provide legal protection, financial certainty, and a clear framework for how financial matters will be dealt with if the agreement is ever relied upon.
If important issues are missed during drafting, financial circumstances are not properly considered, or legal advice is rushed, disputes may arise years later when circumstances have changed, and the financial consequences are much greater.
For that reason, the focus should not be limited to obtaining a document at the lowest possible price. The more important question is whether the agreement has been carefully prepared, properly advised on, and is capable of providing the protection and certainty it was intended to achieve.
Why Financial Disclosure Matters
Financial disclosure is central to the strength and reliability of a Financial Agreement. The agreement should be prepared against a clear understanding of each party’s financial position, including assets, liabilities, income, superannuation, business interests, trusts and financial resources.
The Family Law Act 1975 (Cth) recognises the importance of full and frank disclosure in financial and property matters, and a Financial Agreement may be vulnerable if it is later alleged that a party failed to disclose a material matter.
It is an important step in ensuring that the agreement is informed, balanced, and capable of providing the protection and certainty it was intended to achieve.
A Tailored Agreement Is Stronger Than a Template
No two relationships are identical.
A template that works for one couple may be entirely unsuitable for another. Financial circumstances, plans, family responsibilities, business interests, and long-term objectives can vary significantly from one relationship to the next.
Effective legal advice requires more than inserting names into a standard document. It involves understanding the people involved, identifying potential risks, and ensuring the agreement reflects their particular circumstances.
A carefully prepared Binding Financial Agreement should be tailored to the people signing it and the objectives they are seeking to achieve.
Financial Agreements as Long-Term Protection
Many people view insurance as an investment in protection rather than an expense.
Financial Agreements can often be viewed in a similar way.
While no agreement can eliminate every future risk, a properly prepared Financial Agreement can help provide certainty and establish a clear framework for managing financial issues if circumstances change.
This can be particularly valuable where parties wish to protect existing assets, address future financial responsibilities, or create certainty around potential property settlement issues if a relationship later ends.
For many people, the value lies not in having a document. The value lies in reducing uncertainty and potentially avoiding costly disputes in the future.
Contact Shan Lawyers today to obtain clear, practical advice before signing a Financial Agreement.
About the Author
Thirumalai Selvi Shanmugam is the founder, Director, and Principal lawyer at Shan Lawyers and is a leading family law specialist in Australia whose expertise is often sought by organisations and the media.
Disclaimer
This article provides general information only and does not constitute legal advice. Family law matters are fact-specific, and the options available will depend on the circumstances of each case.