If you've been wondering what's involved with getting a pre-nup (or, as they're more properly described in Australia, a Financial Agreement), this guide covers topics such as when & how they can be made, what are the advantages and other common questions

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Financial Agreements
William Sloan, accredited specialist family lawyer
What is a Financial Agreement ...............................................................................................................1
Who can make a Financial Agreement ...................................................................................................2
When can a Financial Agreement be made............................................................................................2
Examples of situations that might make it worthwhile considering a Financial Agreement .................2
Parties becoming increasingly involved with a family business .........................................................2
Parties expecting an inheritance.........................................................................................................3
Parties wishing to avoid becoming involved in Family Court proceedings.........................................3
Second relationship – with children from first relationship...............................................................3
Parties migrating to Australia with an existing foreign Agreement ...................................................3
What are the steps required to make a Financial Agreement................................................................3
What are the costs involved with making a Financial Agreement .........................................................4
What are the potential costs that might arise if a Financial Agreement is not in place.........................4
How do Financial Agreements interact with estate planning.................................................................5
How do Australian Financial Agreements interact with foreign agreements ........................................5
How do Australian Financial Agreements interact with foreign assets..................................................5
Are Financial Agreements binding..........................................................................................................6
Further information ................................................................................................................................6
What is a Financial Agreement
A Financial Agreement is a written Agreement made between the parties to a marriage or de facto
relationship, which deals with their financial rights in the event of a separation.
The financial rights dealt with in a Financial Agreement can be:
• alteration of property interests;
• spousal maintenance; or
• both alteration of property interests and spousal maintenance.
There are certain matters which cannot be dealt with in a Financial Agreement, including:
• parenting arrangements; and

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• child support.
If a separation occurred, then these matters would remain to be dealt with (even with a Financial
Agreement in place).
Who can make a Financial Agreement
A Financial Agreement can be made by:
• parties who are intending to get married;
• parties who are already married;
• parties who are intending to commence living together in a de facto relationship;
• parties who are already in a de facto relationship.
When can a Financial Agreement be made
A Financial Agreement can be made:
• before parties get married or begin living together in a de facto relationship; or
• after parties have been married or begun living together win a de facto relationship.
Examples of situations that might make it worthwhile considering a
Financial Agreement
Parties becoming increasingly involved with a family business
It is not uncommon for adult children to become increasingly involved with family businesses over
time. This may include the children:
• becoming shareholders in or directors of companies;
• having money owing to the children pursuant to loan accounts;
• a range of other arrangements being put in place.
As part of a wider conversation about succession planning, it may be prudent to consider asking adult
children to enter into Financial Agreements with their partners.
Without a Financial Agreement in place, property that has been placed in the name of the adult child
(for example, shares in a company) is property that will be subject to claim in the Family Court if there
is a relationship breakdown between the adult child and their partner.
A Financial Agreement can provide a degree of protection for that property.

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Parties expecting an inheritance
If a party has already received an inheritance or is expecting to receive an inheritance at some stage
in the future, then they may wish to consider entering into a Financial Agreement to provide a degree
of protection for the inheritance.
If parties separate without a Financial Agreement in place, there is no automatic quarantining of
inheritances if the entitlements of the parties are being determined in the Family Court.
A Financial Agreement could, for example, provide that the inheritance is to remain with the party
who received it while other assets accumulated jointly by the parties are divided between them
following separation.
Parties wishing to avoid becoming involved in Family Court proceedings
Parties may be entering into a second relationship. At the breakdown of their first relationship, they
may have experienced being involved in Family Court proceedings and the associated costs and delay.
Having experienced those aspects of Family Court proceedings at the end of their first relationship,
they may be seeking to avoid those outcomes in respect of the second relationship.
Entering into a Financial Agreement can be a means of achieving that.
Second relationship – with children from first relationship
A party may have children from a first relationship and be entering into a second relationship. They
may wish to ensure that their assets are protected and available to be passed on to their children.
Without a Financial Agreement in place those assets are exposed to a claim if the second relationship
breaks down. A Financial Agreement can provide a degree of protection for that property, ensuring it
remains available for it to be passed on to the children.
Parties migrating to Australia with an existing foreign Agreement
For further information in relation to this situation, see the section below under the heading “How do
Australian Financial Agreements interact with foreign agreements”.
What are the steps required to make a Financial Agreement
Usually the making of a Financial Agreement involves the following broad phases or steps:
1. Disclosure of information and documents about the parties existing financial circumstances.
2. Negotiation as to the terms to be contained in the Financial Agreement.
3. Drafting of the Financial Agreement.

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4. Provision of detailed written advice in relation to the proposed Financial Agreement. Each
party must get independent legal advice. This means that there will be one lawyer acting for
one party and another lawyer acting for the other party.
5. Execution of the Financial Agreement.
There is no mechanism for the registration of Financial Agreements in Australia. The Agreements are
a private document. Once signed, they need to be held in a safe location along with other similar
documents, such as Wills and so forth.
What are the costs involved with making a Financial Agreement
Factors that can influence the extent of the work required and the associated costs involved with
making a Financial Agreement include:
• The extent to which the negotiations about the terms of the Financial Agreement are conducted
directly between the parties as compared to being conducted by lawyers on their behalf;
• The complexity of the parties’ financial circumstances before the Agreement is made. For
example, the extent to which the parties are involved with various entities such as companies and
trusts.
• The complexity of the terms that are negotiated to be recorded in the Financial Agreement.
Typically speaking, one party to the Agreement will take responsibility for most of the work associated
with the drafting of the Agreement. Typically, that party will have higher costs than the other party.
For the party who takes responsibility for the drafting, it is not uncommon to incur costs in the range
of about $5,000 to $10,000. Depending upon the particular circumstances, the costs in individual
matters can be higher or lower than those typical costs.
What are the potential costs that might arise if a Financial Agreement
is not in place
When considering the costs associated with making a Financial Agreement, it is relevant to have
regard to what might be the potential costs if no Financial Agreement were in place. These costs
include:
• The costs associated with being involved in a contested case before the Family Court. Due to
delays in the system, it is not uncommon for the Court to take between 2 and 3 years to deal with
a case. Over that period it is not uncommon for significant legal costs to be incurred by each party.

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Over the course of 2 or perhaps 3 years of litigation, each party might incur costs of perhaps
$50,000 to $150,000 (potentially higher);
• There is also the question of the amount that the Court might award to the other party. Without
a Financial Agreement in place, the Court will be in control of how much is awarded to the other
party. The Court is not constrained by considerations such as whether a particular amount was
received as part of an inheritance. In contrast, if parties enter into a Financial Agreement, they
remain in control of the outcome.
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;

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• 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 like further information about Financial Agreements, please contact:
William Sloan
Director
Kim Wilson & Co
Telephone: (08) 6380 3900
Email: william.sloan@kimwilson.com.au

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Disclaimer
The material in this document is for general information purposes only and should not be construed
as legal advice, legal opinion or any other advice on any specific facts or circumstances. Readers should
not act or refrain from acting upon this information without seeking professional advice. Transmission
of information in this document is not intended to create, and receipt does not constitute, a lawyer-
client relationship between the sender and receiver.
The information in this document is subject to change without notice. Although we try to keep our
material current and accurate, you should not rely on this information or its applicability to any specific
circumstances without first seeking professional advice. The information in this document should in
no way be taken as an indication of future developments or results. We make no warranties,
representations, or claims of any kind concerning the information available in this document. We
expressly disclaim all liability to any person in respect of the consequences of anything done or
omitted to be done wholly or partly in reliance upon the use or contents of this document.