With the introduction of Section 90B (and other related sections) of the Family Law Act 1975, financial agreements entered into by partners, relating to property and maintenance, are now recognised and enforced by the courts.
The agreement may cover:
Property or financial resources before marriage, during marriage, or in the event of a breakdown of marriage [s 90B(2)(a)]; and/or maintenance during marriage, or in the event of a breakdown of marriage [s 90B(2)(b)]. “Property” may include:
“Maintenance” may be expressed in terms of regular payments for a specified period, the payment of certain bills and expenses incurred (such as school fees or rate payments in relation to a residential property), or as a lump sum.
Note that either or both of the parties are entitled to maintenance, although it is usually calculated to be paid from the party with higher earnings to the party with lower income or earnings.
For a pre-nuptial agreement to be considered valid under Section 90B it must:
It should be noted that any new financial agreement will have the effect of terminating previous agreements if all the parties to the previous agreement are parties to the new agreement [s 90B(4)].
Yes, under Section 90K the court can set aside an agreement if it is satisfied that the agreement was:
In considering whether to set an agreement aside, the court will have regard to whether the circumstances of the parties have changed to such an extent since the making of the agreement as to make the agreement unjust. The courts will have particular regard to the effect of any existing agreement on the welfare of the children of the marriage.
To avoid an agreement being set aside by the court, the parties should consider entering into a new agreement when there is a significant change in circumstances, which may include (but is not limited to):
Under Section 90C, parties can enter into agreements relating to property and maintenance during marriage. Section 90C is in all respects identical to Section 90B (agreements entered into before marriage), except that it applies to agreements entered into after the marriage has taken place. A new agreement entered into during marriage will terminate any existing pre-nuptial agreement under s 90B or any agreement entered into under s 90C (s 90C(4)).
As with pre-nuptial agreements, the agreement may cover “property” of the marriage both during and after marriage. This includes property acquired by the couple or by each party separately during the marriage. Property may include cash in bank accounts, shares, insurance, cars, homes, businesses, intellectual property and other assets, such as art or wine collections. The agreement should stipulate clearly what items of property it applies to, as property not covered by the agreement may be dealt with separately by the court in the event of a breakdown. Thus, to ensure all assets are covered, the agreement should be reviewed frequently, particularly at the time of sale or purchase of major assets such as the family home. The easiest way to do this is to incorporate a list of property into the agreement by way of an annexure, thus making it easy to review.
These may be entered into under Section 90D following the breakdown of marriage. Again, these are similar to both pre-nuptial agreements under s 90B and agreements entered into during marriage under s 90C. Financial agreements entered into following the breakdown of marriage have the effect of terminating any existing pre-nuptial agreements or agreements entered into during marriage under ss 90B, 90C. The requirements for a valid agreement under s 90D are the same as those required under ss 90B and 90C.
Under recent amendments to the Family Law Act, defacto couples can now make financial agreements under s 90UB (Financial Agreements before De Facto Relationship), s 90UC (Financial Agreements during De Facto Relationship) and s 90UD (Financial Agreements After Breakdown of a De Facto Relationship).
As discussed above, pre-nuptial agreements, those entered into during marriage or those entered into after the dissolution of marriage differ very little. However, it is preferable for the protection of each party’s separate property that the agreement be entered into earlier rather than later (eg. in contemplation of marriage under s 90B).
Comasters can advise clients on financial agreements between partners.
© Comasters 2001. Revised April 2015.
Important: This is not advice. Clients should not act solely on the basis of the material contained in this paper. Our formal advice should be sought before acting on any aspect of the above information.