In the July issue of B2B, my colleague Alison Osmand, provides an important summary of why a Financial Agreement (also known as a “prenuptial agreement”) might be good for some relationships. Alison’s article is timely in light of a recent decision handed down in the Family Court of Australia.
In the decision of Raleigh & Raleigh, handed down on 30 July 2015, the Judge had to decide whether or not a Financial Agreement entered int prior to separation was binding on a husband and wife after they separated. The parties entered into the Agreement 8 days prior to the wife giving birth to their first child, and in circumstances when she had received less tha 15 minutes of advice from her solicitor prior to signing the document. The effect of the Agreement, if it was held to be binding, would be that the Husband’s assets brought to the marriage would be protected from a claim made by the Wife after separation. Not surprisingly, the Court made order setting aside the Agreement and made findings that the advice the Wife received was inadequate and that the Husband exerted undue influence o the Wife to procure her entry into the Agreement.
As a firm that specialises in family law, we are occasionally contacted by potential new clients who want to “drop in” and have one of our lawyers sign a statement of independent legal advice for a Binding Financial Agreement, usually drafted by the other party’s solicitor. The above case provides a timely reminder that although Financial Agreements can be an effective way of sorting out a couple’s financial affairs, great care must be taken when drafting the Agreement and proper consideration ought to given to the actual circumstances that are present at the time the parties are entering into the Agreement. The object of providing independent legal advice is not simply to meet minimum formal requirements, but rather the advice and the manner in which it is given must be of the highest standard. If either party receives inadequate advice it could operate as a ground to apply to have the Agreement set aside. A hastily drafted Agreement, prepared on the spur-of-the-moment, is at greater risk of being set aside by a Court at a later date.
If you are contemplating entering into a Financial Agreement it is vital that the legal advice received is comprehensive and well considered. If you are being asked to sign a document that you do not fully understand or if your circumstances at the time put you in a vulnerable position then clearly this may not be the right time to enter into the Agreement. An agreement of this kind is best prepared in the “cool light of day” when both parties have properly considered all their options and each party has received specialized advice from their own trusted advisor.