New Insight: Why Independent Legal Advice Can Make or Break Your Financial Agreement

A financial agreement can look impressive on paper.

It might be carefully drafted. It might cover property, businesses, inheritances, trusts, superannuation, debts and future spousal maintenance/support. It might even be signed, witnessed and neatly filed away.

But… if one party did not receive proper independent legal advice before signing, that agreement may have a problem.

And not a small problem.

In Australia, independent legal advice is not a box-ticking exercise for financial agreements. Each party needs advice from their own Australian legal practitioner about what the agreement actually does to their rights, and the advantages and disadvantages of signing it at that time. Under the Family Law Act 1975, the independent legal advice requirement applies to financial agreements for married couples and de facto couples, including advice about the effect of the agreement on that party’s rights and the advantages and disadvantages of making the agreement. (Federal Register of Legislation)

That means the advice matters just as much as the document itself.

Each party must have their own lawyer. Not the same lawyer. Not the same firm acting for both people. Their own independent legal adviser.

This is because a financial agreement affects each person differently. One person may be protecting existing assets, a business, a future inheritance or family wealth. The other person may be giving up rights they would otherwise have if the relationship ended. Those interests are not the same, even when the couple is on good terms.

Independent legal advice means each person has someone in their corner who is only looking after their interests. A lawyer advising one party needs to explain the effect of the agreement on that person’s rights, and the advantages and disadvantages of signing at that time. 

Using the same lawyer would create an obvious problem. A lawyer cannot properly advise two people whose rights, risks and financial outcomes may be different. If one party is being asked to give up more than the other, the lawyer would be in a conflict. The advice would no longer be truly independent.

This is why each person must have a separate lawyer, enough time to obtain proper advice and a real opportunity to ask questions before signing. It may feel like an extra step, but it is one of the key things that helps protect the agreement later.

For professionals advising clients, this is an important practical warning. If a client says, “Can we just use the same lawyer to save time?” the answer should be no. If they want the agreement to have the best chance of standing up later, each party needs their own independent legal advice from the start.

For people thinking about signing, this is your warning not to rush the process. A financial agreement can be a smart, respectful and protective step, especially when handled properly. It can help couples talk about money, expectations and future planning before conflict ever enters the room. You can learn more about how these agreements work on our website via financial agreements and prenups page.

For accountants, financial advisers, estate planners and other trusted professionals, this is where your guidance is especially important. If a client treats independent legal advice as “just getting the certificate signed”, they may be walking straight into a future dispute.

The real risk often appears years later. The relationship ends. One person wants to rely on the agreement. The other says they did not understand it, were not properly advised, or felt pressured to sign.

By then, the agreement everyone thought would avoid a fight may become the fight.

1.  Why Independent Legal Advice Is More Than a Signature

Independent legal advice is not just a final step before a financial agreement becomes “official”. It is one of the central safeguards that helps protect the agreement, the parties and the integrity of the process.

A financial agreement can deal with major financial consequences. It may decide how property will be divided if a relationship ends. It may quarantine assets one person owned before the relationship. It may protect inheritances, business interests or family wealth. It may also limit or exclude future claims for spousal maintenance, where the law allows that to occur.

That is a lot to ask someone to understand from a quick read-through.

Proper independent legal advice gives each person the opportunity to understand what they are signing before they sign it. The lawyer’s role is not simply to say, “Yes, this agreement exists.” The advice should help the client understand how the agreement affects their rights, what they may be giving up and whether the agreement creates any obvious risks for them.

For professionals advising clients, this distinction is important. A client may say they “just need the advice certificate”. That phrase should set off alarm bells. The certificate is evidence that advice was given, but the value is in the advice itself.

The process should include:

• Enough time to review the agreement properly
• A clear explanation of the legal effect of the agreement
• Discussion of the advantages and disadvantages for that particular person
• Consideration of the client’s financial circumstances
• An opportunity for the client to ask questions
• Advice that is genuinely independent from the other party

When this process is rushed or treated casually, the agreement may become vulnerable later. It is often not the romantic part of planning a future together, but it is one of the most important. Think less “paperwork”, more “seatbelt”.

2. What Happens When One Party Did Not Get Proper Advice?

When one party did not get proper advice, the agreement may be open to challenge.

That does not always mean the agreement automatically disappears. Family law is rarely that neat. The outcome will depend on the facts, the agreement, the advice given, the surrounding circumstances and what each party can prove later. However, a lack of proper independent legal advice can create a serious risk that the agreement will not be binding, or that a court may be asked to set it aside.

The Family Law Act sets out technical requirements for when financial agreements are binding. These include signing requirements, independent legal advice requirements, signed statements from legal practitioners and exchange of those statements. Financial agreements must meet technical requirements under sections 90G and 90UJ of the Family Law Act 1975, and that the law in this area is complex. (Federal Circuit Court)

In practical terms, a challenge might arise where one party says:

• They did not understand the effect of the agreement
• They were not told what rights they would otherwise have
• They were not advised about the disadvantages of signing
• The advice was too rushed or too general
• Their lawyer did not have enough information to advise properly
• They felt pressured to sign
• They were given the agreement very close to a wedding or major deadline
• The certificate was signed, but the advice was not meaningful

This is why “proper advice” matters. The risk is not just whether a document exists. The issue is whether the process behind the document was strong enough to withstand scrutiny later.

For clients, the safest approach is simple: get advice early, ask questions and do not sign until you understand the consequences.

For professionals, the safest referral message is just as simple: do not leave legal advice until the last minute.

3. The Advice Must Be About That Person, Not Just the Agreement

A common mistake is thinking independent legal advice is only about explaining the document.

It is not.

The advice must be personal to the person receiving it. That means the lawyer needs to understand who the client is, what they own, what they may be entitled to, what they may be giving up and what the agreement means for them in real life.

A financial agreement that is perfectly acceptable for one person may be a very poor deal for another. For example, an agreement may be sensible for someone entering a second relationship with significant existing assets and adult children. The same style of agreement may be risky for someone who is young, financially dependent, planning to have children and likely to step back from paid work.

The words on the page matter, but context matters too.

Proper advice should consider questions such as:

• What assets, liabilities and financial resources does each person have?
• Is there a business, trust, inheritance or family loan involved?
• Is one person financially stronger than the other?
• Is one party likely to pause or reduce work to care for children?
• What would the client’s position potentially be without the agreement?
• Is the agreement balanced, one-sided or risky?
• Are there practical problems with how the agreement would work?

This is where full and frank financial disclosure becomes so important. A lawyer cannot give meaningful advice in a vacuum. If a client does not have a proper picture of the financial landscape, their understanding of the agreement may be incomplete.

For accountants, advisers and other professionals, this is a helpful reminder. The numbers are not background noise. They are the map. Without them, the lawyer may be trying to advise with one eye closed.

A good agreement should be legally sound, commercially sensible and clearly understood by both people before it is signed.

4. Timing Can Be the Quiet Trouble-Maker

Timing can make or break the strength of a financial agreement.

One of the most common risk areas is leaving the agreement too late. If the agreement is presented shortly before a wedding, a major move, a pregnancy, a property purchase or another life event, one party may later say they felt they had no real choice but to sign.

Even where there was no bad intention, poor timing can create a bad look.

Imagine this scenario. A wedding is two weeks away. Guests have booked flights. Deposits have been paid. Family members are excited. Then one person is handed a financial agreement and told it needs to be signed before the big day. Even if they technically meet with a lawyer, the pressure is obvious.

That is not the calmest environment for making long-term financial decisions.

Proper independent legal advice requires time. Time to read. Time to understand. Time to ask questions. Time to negotiate changes. Time to consider whether signing is actually in that person’s interests.

For professionals advising clients, early referral is one of the most valuable things you can do. If a client mentions a wedding, new relationship, property purchase, inheritance plan or business succession issue, the conversation about a financial agreement should happen early, not when the confetti is already packed.

Better timing can also improve the tone between the couple. When a financial agreement is raised early and respectfully, it can feel like planning. When it is raised late and urgently, it can feel like pressure.

A financial agreement should never feel like an ambush with a pen attached.

If you are thinking about signing one, start early. If you are advising someone who may need one, encourage them to get legal advice before deadlines start doing the talking.

5. Why Poor Advice Can Create Expensive Problems Later

The irony of financial agreements is that they are often created to avoid future disputes.

But when independent legal advice is poor, rushed or incomplete, the agreement itself can become the dispute.

If the relationship later breaks down, one party may want to rely on the agreement and the other may want to challenge it. Instead of giving both people certainty, the agreement may trigger questions about whether it is binding, whether it should be set aside, whether proper advice was given and whether the process was fair.

The Family Law Act gives the court power to set aside financial agreements in certain circumstances. For married couples, section 90K includes grounds such as fraud, including non-disclosure of a material matter, the agreement being void, voidable or unenforceable, impracticability, certain child-related hardship, unconscionable conduct and specific superannuation issues. (Federal Register of Legislation)

That does not mean every imperfect agreement will be set aside. It does mean the process matters.

A dispute about legal advice can become expensive because it may involve:

• Reviewing the agreement and the advice certificates
• Looking at correspondence between lawyers
• Considering what financial disclosure was provided
• Examining timing, pressure and negotiation history
• Preparing evidence about what each person understood
• Potentially involving the lawyers who gave the original advice

That is not where anyone wants to end up.

From a client’s perspective, proper advice upfront can feel like an extra cost. In reality, it is often a risk management step. Paying for proper advice before signing may help avoid a much larger dispute later.

From a professional’s perspective, it is worth encouraging clients to see legal advice as part of the structure, not an afterthought. Just as you would not build a house and then ask someone to check the foundations with a quick glance, you should not build a financial agreement on rushed advice and hope it holds.

The certificate may be short. The consequences are not.

6. What Proper Independent Legal Advice Should Feel Like

Proper independent legal advice should feel clear, careful and tailored.

It should not feel like being waved through a legal drive-through.

A person signing a financial agreement should expect their lawyer to spend time with them. They should have the chance to explain their circumstances, ask questions and talk through the agreement in plain English. If they do not understand something, that should be a reason to pause, not a reason to push ahead.

Good advice often includes a discussion about what the agreement does now, what it may do in the future and what could happen if the relationship ends. The client should understand the practical impact, not just the legal language.

For example, it is one thing to say, “You are excluding a claim to property owned by the other party.” It is another to explain, “If the relationship ends after many years, and this clause operates as intended, you may not be able to claim an interest in that property even if its value has increased.”

That is the kind of clarity people need.

A person receiving advice should feel able to ask:

• What would my position potentially be without this agreement?
• What am I giving up by signing?
• What are the advantages for me?
• What are the disadvantages for me?
• Are any clauses unusual or particularly risky?
• Do you recommend changes before I sign?
• Do you have enough financial information to advise me properly?

For professionals, this is also useful to understand. When your client comes back from their lawyer, they should not simply say, “Done, certificate signed.” Ideally, they should be able to explain, in their own words, what the agreement means for them.

That is a very different level of understanding.

Proper advice does not necessarily mean the client will love every term. It means they know what they are signing, they understand the consequences and they are making an informed decision.

7. Practical Tips Before Signing a Financial Agreement

If you are considering a financial agreement, the best time to protect it is before anyone signs.

Once the agreement is signed, fixing problems can become harder. Once the relationship has broken down, every weakness in the agreement may be examined through a very different lens. That is why the preparation stage matters so much.

Start with the right mindset. A financial agreement should not be about winning, hiding or forcing a result. It should be about clarity, planning and reducing uncertainty. When approached properly, it can be a practical way to have a difficult conversation before life becomes more complicated.

Before signing, consider these steps:

• Raise the agreement early, especially before a wedding or major financial decision
• Make sure each person has their own independent lawyer
• Provide proper financial disclosure
• Allow time for review, advice and negotiation
• Avoid pressure, ultimatums or last-minute deadlines
• Ask questions until the agreement makes sense
• Keep records of advice, correspondence and versions of the agreement
• Do not assume a signed certificate fixes a poor process

For professionals advising clients, your role may be to identify when a financial agreement conversation is needed. That might be when a client is entering a new relationship with significant assets, receiving family wealth, restructuring a business, buying property with a partner or planning for children in a blended family.

You do not need to give family law advice unless that is your role. But you can help your client understand that timing and proper advice are critical.

For clients, the key message is this: do not sign something you do not understand just to keep the peace. A good agreement should be strong enough to protect both people, and clear enough that both people know what they are agreeing to.

If the process feels rushed, pressured or confusing, slow it down.

The agreement may be about your future. It deserves more than a quick signature.

Summary: Get the Advice Right Before the Agreement Becomes the Problem

Independent legal advice can make or break a financial agreement.

For people thinking about signing, it is one of the most important protections you have. It helps you understand your rights, your risks and the real effect of the agreement before you commit to it.

For accountants, financial advisers, estate planners and other professionals, it is also a critical referral point. If your client is considering a financial agreement, early and proper legal advice may be the difference between a document that provides certainty and one that becomes a future battleground.

The key is not just whether advice was given. The key is whether the advice was independent, informed, timely and meaningful.

A financial agreement can be a smart and practical tool, but it needs to be handled carefully. If one party did not receive proper advice, the agreement may be vulnerable later. If both parties receive proper advice, understand the terms and enter the agreement carefully, the agreement is far more likely to do what it was intended to do.

If you are considering a financial agreement, or you are advising a client who may need one, get legal advice early. The earlier the conversation starts, the better the chance of getting the process right.

To speak with a family lawyer about a financial agreement, prenup or independent legal advice before signing, contact The Law People and get clear advice before the paperwork becomes a problem.