Post separation financial agreements – some things to consider

In this video, CGW family law partner Justine Woods talks about post separation financial agreements and some things you may wish to consider.

VIDEO TRANSCRIPT

Hello, hello, everyone, I’m Justine Woods. I’m the family law partner at Cooper Grace Ward.

Now if you’re keen viewers of the videos, poor things, you will see that I’ve done a number of videos about financial agreements and I am constantly being asked questions about that. And then generally speaking, regarding prenuptial agreements or agreements as you’re entering a de facto relationship or in the early phases of a marriage or when living together. And they’re tricky agreements both to draft and to be a party to quite frankly because they’re extremely unromantic and they require a series of difficult conversations between the couple.

But there also seems to be some, there’s a surge in the community, and perhaps it’s because of the merger of the two courts since the first of September and some uncertainty in the media about how things are all working. I’ve had lots of inquiries from people who have separated and they say they have a deal with their spouse and they want to do a financial agreement, and that’s all perfectly fine. But then the new dialog is to say, ‘and I’ve heard that it’s better than going to court because there’s no oversight’. And then what has invariably followed in these inquiries is a deal that is so far out of the range of what the court would approve that the spouse proposing it is hoping that a financial agreement, which is effectively a contract between the spouses and signed off by the two solicitors after having given independent legal advice on two aspects and I’ll come back to, will allow you to do some kind of outrageous deal without any scrutiny and without any consequences.

Now a financial agreement, particularly for wealthy people and particularly for, or who feel they have wealth to protect or who have spousal maintenance obligations that they want to terminate and deal with as to the highest level of legal protection available, a financial agreement is excellent and it is a different process, but the result is generally intended to be the same. And what I’ve been saying to these people ringing me up is ‘That’s all fine, but you’ve got to find a lawyer who will sign off on it and for your spouse’, and they’ve got to be one, you’ve got to find, there are lots of lawyers who won’t do financial agreements at all because I think and I think it’s a heightened and unnecessary level of fear if you’re doing things correctly. But some are making a genuine call about risks that are do it all the time, not to do the agreements. Or that they will say following the decision of Thorne and Kennedy that went all the way to the High Court, that the best and safest course of action for the solicitor is to just simply say, ‘No, don’t sign it, don’t sign it at all’.

Now that was about a prenuptial agreement, but the principles are the same. And so really, it’s you’re either trying to convince the court through a set of documents or you’re trying to convince the other side with the benefit of legal advice and their lawyer that a deal that is disproportionately favourable to one party and not on facts that would support that should be signed off. And that’s no more successful strategy than any other. So, for people’s knowledge out there, a financial agreement, it is a contract and so it will have to be, people can take less. I’ve got clients all the time that say ‘Justine, I understand what you’re saying to me, but I don’t want to press for that’. And that’s fine. If it’s broadly within the range and it’s their decision, it’s not mine to make, but I talk to them at length and provide very detailed advice so that they’re making an informed decision and genuinely understand, for example, that in a year’s time they mightn’t feel as they do, they mightn’t be, I try not to get people making agreements while they’re still living in the same house with all the horrors that being separated under the one roof will bring. Yes, you can do a deal that’s not quite within your range. There are many reasons why people might contemplate that, but if it’s crazily out of the range, it’s probably not, we’re not going to be able to find someone to sign off on it on the other side. And even if you’re the person who’s getting this fantastic deal, it’s kind of an unsafe basis on which to resolve things because oftentimes what happens is the person in that position maybe felt under pressure or didn’t have great legal advice, had some legal advice, but not adequate legal advice, wanted something about the children so that they have another agenda about why or they’re just knuckling under and then when they shake that sadness or guilt or whatever it is off, then they’ll come back and ask for more. And if it’s crazily out of the range, yes, it’s extremely hard to get out of a financial agreement and the court has consistently said ‘You’re entitled to undertake bad bargain if you want one’. But I say to my clients, if it’s just too wild, you’re basically daring the other side to take you on.

So, all I’m saying is that the financial agreement is not some kind of back door arrangement where you can get a deal across the line that is completely out of the range. There are better and safer options not to be paying at the top of the range, not to be rolling over and giving lavish sums of money to the other side. If that’s not the agreement, but it has to be broadly within the range to make it safe for both parties and a truly final resolution in a practical sense.

So, if you’re considering some of those issues, you’re very welcome to contact us at Cooper Grace Ward if you would like to do so.