Many couples are able to reach an amicable agreement when they separate. Without any intervention, they are able to divide their assets fairly and determine co-parenting arrangements into the future. Although they have reached an informal agreement, it is usually important to have that agreement documented formally to reduce the risk of one party changing their mind down the track.
There has been a string of cases in 2015 about couples who reach “private” agreements when they end their relationship but then later, one party makes a claim against the other.
A critical area emerging is your superannuation entitlements.
If you separate from your spouse / partner, “private” agreements typically do not deal with your accumulated superannuation entitlements that you had at the time of separation.
Say $50,000 was accumulated in your superannuation fund and your partner had $3,000 accumulated in their superannuation fund. If your partner comes to Court ten years later and said they want a share of your superannuation, the Court would certainly conduct an analysis of whether any informal agreement you made when you split up was one where your partner was adequately informed about all assets and liabilities, including your superannuation.
If you only had an informal agreement, no one would hold any documents to prove what the other person did or did not know. In a number of such cases, a Court would award your former partner a settlement of some of your superannuation that has grown in value to a healthy sum.
Generally speaking if your financial position improves dramatically within a few years of separation and your partner’s deteriorates, particularly if they have care of children, it is hard for a Judge to resist giving your partner some money even though you may have already come to a “private” agreement between you.
Make agreements when you are both amicable
Reasons why you should legally document your agreement
Legally documenting your agreement is like taking out an insurance policy. You take out an insurance policy so that in the unlikely event something unfortunate and unexpected takes place, you are protected financially.
Formalising your agreement following separation through a legal document will:
- protect you from your former partner changing their mind or reneging on your agreement in the future
- give you both certainty about what your agreement is
- take into account matters you might not have even thought about, but that your lawyer will advise you about, at the time of the agreement to prevent later disputes with your former partner
- allow you both to understand whether the agreement is fair, missing any critical aspects and whether it could be overturned at a later date
- protect you from your former partner making a further claim against you at a later date
Your alternative is to document your legal agreement at the time of your separation at relatively small cost to both of you; either through Consent Orders (filed with the Court) or a Binding Financial Agreement (not filed with the Court) which gives you peace of mind into the future.
If you have a question in relation to your separation and your family law settlement please contact a member of our Family Law Team who will be delighted to assist you.