Skip to main content

Confirm family law financial agreement advice in writing. Allegations of failing to adequately advise about family law financial agreements continue to be prevalent in family law claims and notifications received by LPLC. Providing a comprehensive letter of advice is good practice and makes it easy to refute the allegations and avoid being drawn into time consuming and costly litigation later on.

Prenuptial financial agreements are notoriously difficult to advise on for many reasons. Not the least of which is clients are often focusing on their current situation and emotions and not considering what might happen in the future. It’s not surprising that clients may struggle to remember the advice that was given when separation occurs many years later. Providing a comprehensive letter of advice confirming the oral advice given to the client is best practice as it will crystalise your oral advice and act as a reference for a client, and also serve as good evidence in the future if the advice is disputed.

In a recent notification the firm’s letter of advice was a good example of what needed to be covered. It was a comprehensive seven-page letter which covered the following things.

  • Details of the agreement including:
    • what property belonged to each party and how it will be dealt with in the event of separation
    • how debts will be dealt with
    • how separation is defined
    • what will happen with spousal maintenance
    • what happens if one of the parties dies.
  • Details about the effect of the agreement on the client’s rights including:
    • bold type statement that the parties were contracting out of their rights under the Family Law Act (the Act) to have the property settlement and spousal maintenance determined in accordance with the Act
    • the process a court would take to determine property orders and that the agreement didn’t allow for this
  • the obligation set out in section 72 to provide for spousal maintenance and the factors to be considered in section 75 of the Act and that the agreement didn’t allow for this
  • the safety net maintenance provisions of section 90F which still applied if one party was unable to support themselves after separation.

Recommendation that the client should not sign the agreement.

In this example the client was only going to receive approximately one percent of current total assets owned by the parties. The practitioner assessed that this did not properly recognise their client’s contributions to the relationship at the time and raised the concerns in conference with the client and recorded them in the letter. When the client complained about the practitioner’s costs and the practitioner’s questions about potential duress the practitioner again pointed out the inequity of the agreement. The client responded that they understood the agreement was one-sided but felt it wouldn’t be fair to fight for anything more and the decision was based on their own morals.

The practitioner was able to negotiate some minor changes to the agreement, but felt the version ultimately signed by the parties was very one sided. Several years later the parties separated and there was some indication that the practitioner may be blamed for an unfair settlement by not adequately advising the client. After producing the comprehensive letter of advice to the client’s new lawyers, nothing further was heard about the matter.

If you provide advice about financial agreements, having a good precedent letter of advice that can be easily customised for each matter is good practice. Make sure the precedent covers all the relevant advice and in particular covers the areas required by section 90G, namely:

  • the effect of the agreement on the rights of the client and
  • the advantages and disadvantages to the client, at the time that the advice was provided

Ensure you send the letter of advice in each matter, so you and the client, have a record of the advice given.

Keep your advice file indefinitely, and it if it is a hard copy, keep an electronic copy of at least the signed agreement and the letter(s) of advice.

Ensure any electronic records can be recovered and read in many years’ time when your technology may have changed.

Confirming letters of advice are good communication tools and essential risk management
Keep your advice files indefinitely
Keep electronic copies of advice letters
Ensure you can recover them in many years’ time

Put it in writing.pdf

(PDF, 140.67 KB)
Download Put it in writing.pdf
TOP