Why Do Financial Agreements End Up in Court?

Many people enter into Financial Agreements to avoid future disputes. However, agreements that are poorly prepared or executed can still end up being challenged years later.

Inadequate Financial Disclosure

One of the most common reasons Financial Agreements are challenged is because one party failed to disclose significant assets, liabilities, trusts, businesses, or other financial interests.

Transparency is critical. If important information is withheld, the Court may consider setting the agreement aside.

Pressure and Duress

A Financial Agreement should be entered into freely and voluntarily.

Problems can arise where one party alleges they were pressured into signing, particularly if:

• The agreement was presented shortly before a wedding;
• They were given insufficient time to obtain advice;
• There were threats or ultimatums; or
• They did not fully understand the agreement.

Conflicts of Interest

Independent legal advice is a key safeguard. Difficulties can arise where solicitors have previously acted for both parties in other legal matters or where the independence of the advice is questioned.

Poor Drafting

Financial Agreements must clearly set out:

• What property is covered;
• How assets and liabilities will be dealt with;
• Maintenance arrangements;
• Timeframes and implementation provisions.

Unclear or incomplete drafting can create uncertainty and increase the risk of future litigation.

Major Life Changes

Even where an agreement is valid when signed, significant life events may create difficulties later.

Examples include:

• The birth of children;
• Serious illness;
• Large inheritances;
• Establishment of businesses or trusts; and
• Significant changes in financial circumstances.

Regular reviews can help ensure the agreement continues to meet the parties’ needs.

Conclusion

Financial Agreements can be valuable asset protection tools, but they must be carefully prepared and regularly reviewed. Early legal advice can help minimise the risk of future disputes and provide greater certainty for both parties.

The Family Law team at Solari & Stock can assist with drafting, reviewing, and advising on Financial Agreements.

If you are considering a Financial Agreement, the Family Law Team at Solari & Stock can provide practical advice tailored to your circumstances. You can reach us on 8525 2700 or click here to request an appointment.

Article by Shweta Kumar
Image created in Canva