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It is possible for two parties about to enter into a relationship to enter into a legally binding financial agreement which details how “pre-relationship assets” and “matrimonial assets” will be divided in the event of separation.
It is important that both parties entering into the agreement appoint legal representatives who have experience in dealing with binding financial agreements and follow the proper procedures set out in the legislation and previous court cases. In order for an agreement to be binding it must be signed by all parties, the parties must have received independent legal advice and the court must be satisfied that it would be unjust and inequitable if the agreement were not binding on the parties.
In cases where one of the parties entering into the agreement holds a position of financial dominance over the other party, the financially dominant party should make adequate provision for the weaker party in the agreement, as it is unlikely that the Court would accept one of the parties leaving the relationship with “nothing”. Parties entering into these agreements should keep sight of the fact that the terms and conditions in the agreement should be “just and equitable” and not result in one of the parties being treated unfairly or unreasonably, as the Courts (if asked) have the power to set aside the agreements as described below.
The parties themselves can terminate the agreement by entering into a new financial agreement terminating the old agreement, or by entering into a written termination agreement to that effect.
The agreement can also be set aside by a Court if it was achieved through deceit, via unconscionable conduct (one of the parties signing cannot read or write English and no interpreter used), or non disclosure of relevant financial information. The agreement can be declared void, voidable or unenforceable, if it is impracticable, or has been frustrated (e.g. bankruptcy and no property to divide), or there has been a material change in circumstances (e.g. birth of a child). The Court can also set aside an agreement entered into for the purpose of defeating creditors (e.g. transferring your property to your spouse, to avoid creditors attempting to sell the property for payment of a debt)
Your behaviour after signing the agreement may also impact on the enforceability of the agreement – any oral agreement , or behaving in manner contrary to the terms and conditions described in the agreement has the potential to destabilise its enforceability.
Assuming you have entered into a binding financial agreement and you have now separated, one of the parties will need to sign a “separation declaration” in order for the financial agreement to take effect. Provided the agreement is enforceable, the assets will be distributed pursuant to the time frames outlined in the agreement.