Financial Agreements were first introduced into the Family Law Act in December 2000 and have become a commonly used instrument since that time.
Indeed, the preparation and drafting of Financial Agreements now accounts for a considerable portion of our day-to-day practice at Wiltshire Family Law.
For a Financial Agreement to be deemed binding on the parties, strict requirements set out in the Family Law Act 1975 must first be fulfilled.
The Financial Agreement must meet certain criteria as set out in the legislation including (but not limited to):
There are two ways that a Binding Financial Agreement can cease to bind the parties, namely:
Should parties wish to vary or amend a Financial Agreement, they must enter a new Financial Agreement replacing the old agreement in its entirety. The new Financial Agreement, referred to as a “Termination Agreement” must be made with the same degree of formality as the original Financial Agreement. As with any Financial Agreement, a Termination Agreement must meet the following minimum requirements:
Given the expense associated with the preparation of a Financial Agreement and the associated legal advice, it is important the original document is dynamic enough to adequately take into account as many of the vicissitudes life may present. Documents that are stagnant and one dimensional are destined to either be set aside (due to being irrelevant at the time they are relied upon) or will have to be replaced at some point in the future by entering a termination agreement. Obviously, neither of these scenarios is palatable given the cost thrown away in legal fees and/or assets lost to a spouse.
Setting Aside an Agreement
The Court may consider setting aside a Binding Financial Agreement in the following circumstances:
A Binding Financial Agreement takes effect as soon as the document is signed by both parties. This means that whilst both parties are required by law to obtain independent legal advice in relation to the Agreement, once the required formalities have been complied with, the Agreement is executed and takes immediate effect.