What Happens to a Binding Financial Agreement When Someone Dies?

The binding financial agreement in Perth will not become void just because one of its signatories has passed away. This fact may come as a shock to many families, especially where the BFA was created a long time ago and is now no longer remembered. If you are an executor, a surviving spouse, or just seeking to understand how the deceased partner’s documentation affects you, here’s the quick answer: Australian family law has covered this ground.

The Family Law Act 1975 is directly concerned with the issue at hand, and the fine details of the matter have much more weight than one would anticipate.

What Does the Law Say About Death?

The provisions of Section 90H of the Family Law Act 1975 deal with this very death issue when it comes to marriages. Simply put, a validly made binding agreement continues to apply despite the death of one of the parties, and it applies to the person responsible for administering the deceased party’s affairs, such as the executor under their will.

This, in practice, means that a family lawyer in Perth handling the deceased party’s affairs cannot ignore the BFA.

How Valid is a Binding Financial Agreement after Someone Dies?

A BFA is a contract that two individuals make under Section 90G(1) of the Family Law Act 1975 for a marriage or Section 90UA(1) if they are in a de facto relationship. This decision can take place before the relationship commences, during the relationship, and even post-separation. Such certainty can only be achieved if a few technical criteria are fulfilled:

• The parties had signed the agreement voluntarily without coercion by the other party.
• Proper legal advice was taken prior to the signing of the agreement, and both parties have a signed certificate of such legal advice.
• Specific financial matters are included in the agreement, and no generalised provisions are included.
• A copy of the legal advice certificate has been provided to each party.

If you fail to complete one of these steps, the contract stands a chance of turning out to be merely an expensive document.

When a Court Can Invalidate the Agreement Even After the Party Dies

Just because a party dies does not mean that the BFA cannot be set aside. Courts may invalidate a marriage agreement by relying on section 90K if the couple is married, or section 90UM if the couple is de facto, and this power survives the death of the party. There are very specific grounds that courts consider for an agreement to become unchallengeable:

• There was an attempt to hide assets, income, or debt that ought to have been declared prior to agreeing.
• The agreement was procured by means of fraud, including third-party fraud.
• The situation changed so much after the agreement was made, and to have the agreement remain intact would put a child of the relationship into great difficulty.
• One party conducted themself in such a way as to constitute excessive dealing.

Any one of these is grounds for bringing the matter back into court again, and it is at this point that financial agreement lawyers, especially those who deal with contested estates, usually step in.

What Should Families Do Now?

A safer option is not to make any assumptions about the cancellation of the agreement due to death or its resolution of all the estate matters. An effective procedure involves the following steps:

• Get a full copy of the signed agreement.
• Find out whether it is legally binding or not.
• Look into the termination, variation or any court proceedings.
• Identify the assets involved.

Therefore, the financial agreements are legally complicated, and legal advice is needed when dealing with any such agreements.

Taking Advice After the Event of Death Has Happened

As the surviving partner or the executor of the estate that involves the existence of the BFA, do not assume that the agreement works in the way you think. These are three different questions and have three different answers: whether the agreement remains valid, whether the agreement covers all the assets that are at issue now and whether the agreement can be contested under 90K or 90UM.

It is better to consult binding financial agreement lawyers regarding this matter before distributing any assets or granting probate.

Final Thoughts

The death of a person is not always sufficient to render a binding financial arrangement invalid. In Australian family law, a binding financial arrangement is usually still operative, becoming binding upon the legal personal representative of the dead party.

As these types of arrangements involve property, maintenance, superannuation and estate, one can only make assumptions that will result in misunderstandings. People who are dealing with the arrangement of a deceased party are advised to get it examined properly by top family lawyers in Perth before anything else.