Grant Hackett received more unwanted media attention with reports he was suing his solicitors for preparing a defective Financial Agreement.
Hackett’s lawyers prepared a Financial Agreement (often referred to as a pre-nup) prior to his marriage to Candice Alley. The agreement was later amended during his wife’s pregnancy with their twins.
According to this SMH article “Hackett sued the two law firms over the allegedly botched agreement, claiming their negligence caused him financial loss because it was found to be not binding.”
Both law firms denied negligence and earlier this year the case was settled privately between the parties.
There were two main points that cast doubt over the Hackett – Alley financial agreement.
- The claim by Candice Alley that she did not receive the appropriate legal advice before signing the agreement; and
- The way in which the agreement may have been modified at a later date.
These events prompt some interesting and common questions about prenups or financial agreements. So let’s explore some of those
Financial Agreements are still a viable way of maintaining control over your assets. However, it is important to be aware of the family law’s requirements if you are entering into this type of agreement. These requirements are unique to Binding Financial Agreements and other binding family agreements and do not generally apply to other types of contracts.
Because of the nature of Financial Agreements, the Family Law Act aims to protect the parties by ensuring that both parties are both fully aware of their rights and any advantages or disadvantages before signing the Agreement.
What does the Family Law Act require for a Financial Agreement to be binding?
Section 90G of the Family Law Act (90UJ for de facto agreements) stipulates that in order to be binding, a Financial Agreement must:-
- Be signed by all parties; and
- Before it is signed, each party must receive legal advice about:-
- The effect that signing the Financial Agreement will have on their rights; and
- The advantages and disadvantages of making the agreement.
- Each party needs to then receive a signed statement from their solicitor confirming that they have received the proper legal advice and each party provide a copy of their solicitor’s statement to the other.
Why do parties need to receive legal advice?
By making a Financial Agreement, the parties are giving up certain rights: specifically, their right to apply to the Court at a later point in time, for an order concerning any property specifically dealt with in the Financial Agreement.
In lieu of giving up these rights, each party agrees that such matters will be dealt with as they have stipulated within the agreement.
Because of the binding nature of this type of Agreement, a party may find it difficult to end the agreement if they change their mind at a later time or decide they are no longer happy with it.
A Binding Financial Agreement can only be altered or terminated by entering into a Termination Agreement or by entering into a new Financial Agreement that specifically terminates the previous Agreement.
These are important issues that you will be made aware of when you receive your legal advice.
Are there any other reasons why a Financial Agreement may be set aside?
Yes. The Family Law Act (s 90K or s 90UM for de facto Agreements) gives the Court power to set aside a Financial Agreement in certain circumstances such as: –
- if the Agreement was obtained by fraud. For example, where one party has hidden or not disclosed assets to the other party.
- a party has engaged in unconscionable conduct to secure the Agreement, for example, by applying undue pressure on the other person or by using unfair tactics to make the other person sign;
- if circumstances have arisen that make it impracticable for the Agreement to be carried out, for example, an agreement cannot be carried out if the main residence which was integral to the Agreement has burned down; or
- if a child will suffer hardship if the Court does not set the Agreement aside.
The provisions of the Family Law Act are intended to protect the parties and ensure that the parties make an informed decision to enter into the Agreement. In particular, parties who may be seen to have a weaker bargaining position or who may not fully understand the extent of the ramifications of making the Agreement.
You can ensure your Agreement is binding by, among other things, following these simple guidelines, all of which are fully set out in the RP Emery Legal Financial Agreement Kit, that is:-
- receiving the necessary legal advice before signing and dating your Agreement;
- being transparent in all of your dealings by being open, honest and up-front. This means declaring all of your assets and any other pertinent information;
- regularly reviewing your Financial Agreement to ensure it remains current and up to date. You may even include a sunset clause in your Agreement if you wish for it to terminate on a particular date or event, for example, after 5 years or on the birth of children.
For more detailed information on how you can enter into your own Financial Agreement, click here.
For more information on securing your Independent Legal Advice, click here.