Key takeaways
- Financial Agreements only become binding after each party receives independent legal advice from an Australian legal practitioner who then signs a Statement of Advice.
- These Agreements apply to both married couples and those in a de facto relationship, sometimes called a Binding Financial Agreement, Prenuptial Agreement or (after separation) Post-nuptial Agreement.
- There is no family court oversight at signing – your lawyer is the gatekeeper, testing fairness, enforceability, and long-term property arrangements.
- Good advice isn’t a quick “sign-off”; it involves reviewing assets, disclosure information (like bank statements and pay slips), modelling future scenarios, and sometimes drafting further protections in Financial Agreements.
- The process often involves multiple phases and can be time-consuming, with legal costs reflecting around 10 hours of professional work.
What makes a Financial Agreement binding under the Family Law Act?
A Financial Agreement is a form of contract between parties to a relationship (whether it is about to commence, already in existence, or at an end). The ability for spouses to enter into them is created under the Family Law Act 1975. Our law is structured such that Financial Agreements only become binding when a family lawyer has given independent advice in relation to them and signed a Statement to that effect. Once this has occurred, the Agreement is binding and capable of being enforced.
Often, that Agreement will have been drafted by the lawyer for one party to it, and it falls to the other party to then get advice about the Agreement, so that they can then sign off on it and bring the Agreement into force. So what does that process – getting advice from a family lawyer – look like, and cost?
Why independent legal advice is essential
It seems simple when said – “I just need advice”. But it is an important responsibility, and it is taken seriously by lawyers. Here’s why.
Firstly, Financial Agreements have no oversight or approval by courts or judges. They become binding when advised upon by a family lawyer. So instantly it is clear that it is an important role, and part of the process.
Parliament intended that lawyers would be the watchguard of the process when they made this the process for Financial Agreements to become binding – to protect people from ‘bad’ Agreements, and help them understand exactly what they are signing up to.
Without proper independent legal advice, a court may later set the agreement aside, leaving separating couples exposed.
What your family lawyer will consider
To fulfil this role, a lawyer must typically consider the proposed Agreement, and meet with the party seeking their advice to take instructions about a variety of things – the short history of the relationship; the pool of property, how it is held and its value; the contributions made by each party, and the present situation and circumstances of each party; and the objectives of each party for the future.
There must also be an examination of the ‘deal’ reached, and whether the draft Agreement fully captures that outcome.
Then there is the question of enforceability and security. What happens if one party does not do what they should? How then can the Agreement be carried into effect?
This may include reviewing assets, financial resources, superannuation, and overall financial circumstances to ensure the deal is fair (in the sense of mirroring how a court might approach the same situation) and workable.
The advice itself – clarity, enforceability and alternatives
Then follows the advice:
- What does the Agreement provide?
- Is it clear in its terms?
- Are there any things that have been missed or that are prejudicial to a client?
- Can the Agreement actually be implemented?
- Is there a Plan B provided for if one party defaults on their obligations?
- And importantly, where does the outcome sit in comparison to what a court might order in the case?
Advice may compare the proposed outcome against likely court orders (in other words, theoretically, how a judge might approach the situation), including spousal maintenance or parenting arrangements if relevant.
Mandatory elements that the law requires
On covering this ground, your family lawyer will be sure to cover matters which the law requires – the effect of the Agreement on your rights, and the advantages and disadvantages to you of entering into the Agreement at the time of giving that advice.
It is compulsory for these areas to be covered, and failure to do so means that the validity of the Agreement may be brought into question.
Reality-testing and when renegotiation is needed
Really, the family lawyer is reality testing the Agreement. Does it contain what it should, and does it provide an outcome in the range of what a court would award?
If not, does the person signing it fully understand that they may be abandoning some of their entitlements, and that there is an alternative option available to them before they sign?
Sometimes this process will reveal that there is no bar to signing the Agreement. At other times, serious flaws in the Agreement will be revealed and will require renegotiation of its terms or the outcome generally.
Future scenarios – will it still be fair later?
Advising on these matters can be deceptively complex. A ‘pre-nuptial’ style Agreement being entered into today may be fair when both parties are young and earning good salaries in the workforce.
Fast forward 20 years, when the parties are older, and one of them has been out of the workforce for 9 years, caring for children. Is it still fair then? And if not, was that explained to the client?
This is especially important for de facto couples or married couples who may face a relationship breakdown many years later.
Accordingly, the giving of advice about a draft Agreement often involves modelling of possible future scenarios and drafting of amendments/additions to the Agreement to better protect the client. That takes time and care, as it is advice tailored to the particular case.
None of that is ‘simple’ or ‘quick’.
Careful drafting of Financial Agreements helps create durable outcomes that remain legally binding and fair over time.
The goal is informed choice
In the end, the role of the family lawyer giving this advice is not to talk anyone out of signing the Agreement, but to make sure the person signing it is fully informed before they commit. The aim is to empower clients with information so they can make a clear, confident decision about whether to move forward.
Why this matters
Because there’s no court or judge checking the agreement at the time of signing, the family lawyer effectively becomes the gatekeeper. Their job is to:
- Reality-check the agreement: Does it reflect the deal reached? Is it fair and workable?
- Compare: If the case were theoretically being determined by a judge, would the outcome be materially different?
- Model for the future: As years go by, and life events occur, how does that affect the outcome in the Agreement – is a satisfactory outcome today, still satisfactory in 15 years’ time if circumstances have changed?
- Identify risks: Are there clauses that could disadvantage a client or leave them exposed?
- Explain consequences: What happens if one party defaults, or if circumstances change in the future?
- Balance power: Ensure clients aren’t pressured into deals they don’t understand, especially when there’s a clear imbalance between the parties.
- Protect enforceability: Provide a record of clear advice if the agreement is ever challenged in court.
By breaking it down this way, the focus is squarely on the practical outcomes for the client, understanding rights, spotting red flags, and empowering them to make an informed choice.
Professional responsibility and scrutiny
It goes without saying that family lawyers take this role seriously and approach it with attention to detail.
They do so through the lens that, one day, a court may be examining the advice given, if a party is trying to set aside the Agreement or avoid its terms. It is not a matter of their simply rubber-stamping the Agreement.
A court may later scrutinise whether proper legal advice was given if there is any challenge to the Agreement.
Time and cost
This is where cost comes in, as attention to detail takes time. Lawyers who have taken this process too cheaply have run onto the rocks. Agreements can be set aside where the advice was not given as required. And lawyers have been pursued for damages where clients ought to have been advised on matters that they weren’t informed about.
In all such cases, the professional and financial consequences for lawyers have been great and ongoing. Any lawyer worth seeing will therefore not cut corners in the advice process.
Because every separation is unique, the process can be time-consuming. Your lawyer will explain expected legal costs and the matters incidental that might increase the time spent.
Typical phases of work
In terms of that actual cost, it will usually be broken into discrete phases:
- Meeting with you to understand the settlement deal and the history of your relationship. This will probably involve 1-2 hours of time;
- Reading the proposed Agreement, identifying if it accurately captures the agreed outcome, or requires amendment to be clearer or better protect the client, and providing advice about the outcome embodied in the Agreement;
- Thirdly, renegotiating and redrafting parts of the Agreement where necessary; and
- Finally, advising on the final product. This is done by a lawyer, invariably in the form of a written letter of advice.
This process, even for experienced lawyers, can involve easily 10 hours of professional time (and more for Agreements involving complex elements). None of it is quick or easy, and it is not a case of ‘just’ signing off. Each stage requires care to ensure the contract is both legally binding and practically workable.
Final word on responsibility, time and budget
Know, therefore, that while the giving of advice may, at first blush, seem simple, in reality, it is a heavy responsibility, with consequences for lawyers and their clients, if it is not done thoughtfully. This will guide the time that is allocated by your family lawyer for the review of your Agreement and the giving of advice on it, and therefore the cost estimated for the task.
In the end, when signing up on a Financial Agreement, people want to know that they are getting what they agreed they would get; that this outcome is in the range of fairness; that the Agreement actually delivers this result to them; and that the Agreement is binding, and an end to the financial relationship. These are all very important things to know, so be sure to allow a budget for the giving of that advice.
Next steps
If your partner, former partner, or ex-partner has asked you to “just sign” a Financial Agreement, or you want to protect your property before or after marriage, it is vital to seek legal advice.
Disclaimer: General information only. Not legal advice. Your circumstances are unique; please seek tailored advice before signing any agreement.
