Common Mistakes in Financial Agreements

The Court has adopted a very strict approach to complying with the requirements for a valid and enforceable Financial Agreement. Common mistakes in Financial Agreements include the following:

1. Non-compliance with Formalities: Agreements must strictly adhere to statutory requirements regarding drafting, signing, and legal advice certifications.

2. Ambiguous Terms: the clauses in the Financial Agreement must be clear, concise and impose obligations on the parties. Vague or unclear language can lead to disputes and misinterpretation of the parties' rights and obligations.

3. Using the Same Lawyer
   Can both parties use the same lawyer for a Financial Agreement? The answer is No. If you and your former partner use the same lawyer to get Independent Legal Advice, then the requirement for Independent Legal Advice has not been met. You may save money in the short term, but not in the long run if your Financial Agreement is invalid and unenforceable. Each party must have their own lawyer.

4. Rushed or Inadequate Advice
   The Court has set aside may Financial Agreements because the legal advice given to the client was not comprehensive or did not fully explore the impact of the Financial Agreement. In the case of Hoult v Hoult, the Court emphasised that Independent Legal Advice must be meaningful, not just a rubber stamp. Your lawyer.

5. Signing Before Advice
   You must receive legal advice before signing the Financial Agreement. If you sign the Agreement before you receive Independent Legal Advice, then the Financial Agreement will be vulnerable to being challenged in Court.

6. Changes in Circumstances

   
   A Financial Agreement which was prepared a long time ago may not include current and accurate information. For example, the values and balance of assets and liabilities, the health and incomes of the parties and the care arrangements for children. Legal advice given on the basis of outdated information may invalidate the requirement for Independent Legal Advice.

7. Ignoring Tax and Superannuation: a Financial Agreement must account for Capital Gains Tax (CGT) and other taxes which may result when implementing the agreement.

8. Ignoring Superannuation: superannuation must be included in the Financial Agreement, whether or not it is being divided between the parties.