Binding Financial Agreements
What is a Binding Financial Agreement?
In the realm of family law, a Binding Financial Agreement (BFA) represents a legal contract between two or more individuals. Such agreements are recognised under Part VIIIA of the Family Law Act 1975 for marriages and Division 4 of Part VIIIAB for de facto relationships. The primary function of a BFA is to delineate the financial rights and responsibilities of each party, effectively removing the court's jurisdiction over these matters. When appropriately executed, a BFA can circumvent the need for court intervention, providing a pre-arranged solution to potential disputes.
BFAs can be comprehensive, covering the entirety of a financial relationship, including assets, maintenance obligations, and superannuation. Alternatively they can be customised to only address particular concerns, such as maintenance arrangements.
Why would I want to enter into a BFA?
Entering into a BFA can provide considerable certainty and peace of mind for both parties. By setting terms in advance for the distribution of property should the relationship dissolve, couples can avoid future conflicts. Furthermore, a BFA can safeguard assets accumulated before the commencement of a relationship or marriage, ensuring that matters post-separation are resolved without excessive legal costs or delays.
Who can enter into them?
To be eligible for a BFA discussed in this article, residency within an Australian state or territory is required—except for Western Australia, which has distinct legislation.
When can I enter into them?
BFAs are flexible in terms of timing. You need not be married or even in a de facto relationship when signing a BFA. This type of BFA is commonly referred to as a ‘prenup’. However, you must be contemplating the commencement of such a relationship. A BFA can also be entered into at any stage after marriage or the commencement of a de facto relationship, including after separation.
Are they enforceable?
For a BFA to be enforceable, it must fulfill specific criteria outlined in sections 90G and 90UJ of the Family Law Act for marriages and de facto relationships, respectively. A critical requirement is that all parties receive independent legal advice on the agreement's implications. Without such advice, the BFA will be deemed unenforceable.
Can BFAs be set aside?
Courts retain the authority to invalidate a BFA under certain conditions detailed in sections 90K and 90UM of the Family Law Act. Grounds for dismissal include fraudulent activity, incomplete technical requirements, impracticality of enforcement, significant changes in childcare needs, or unethical conduct by one party.
The law about Financial Agreements is very complex. If you are a party to a Financial Agreement (or a purported Financial Agreement) which you think should be set aside, you should seek legal advice.
What is the process?
If you wish to obtain a BFA, it is a requirement that you obtain legal advice. Our firm provides complimentary 30 minute consultations to discuss your individual circumstances without obligation. We are committed to transparency and reliability, offering fixed fees for consensual Binding Financial Agreements.
Should you engage our services, we would require detailed information to draft the agreement effectively. This includes (but is not limited to) occupational details, income prospects, superannuation, asset inventories, liabilities, any existing family law financial agreements, and the commencement date of cohabitation.
Final Thoughts
BFAs done correctly provide a structured approach to what can often be a complex and emotionally charged part of a relationship's evolution. With the right guidance and legal advice, a BFA can serve as a protective measure, affording clarity and security to all involved parties.
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