A Binding Financial Agreement (‘BFA’) is an agreement between you and your partner regarding financial matters. Some people may recall pre-nuptial agreements, which are now encompassed in a BFA. A BFA can be entered into prior to a de facto relationship or marriage, during a de facto relationship or marriage, or post-separation, and can be thought of as a contract between you and your partner. If you face a point in your life where it is time for you and your partner to separate, then a BFA, if done correctly and professionally, can save a lot of time, money and conflict in the long term. Separation is already a stressful time and can be made much worse by drawn-out legal battles over assets.
It would not be unheard of for people to be reluctant to enter into a BFA pre-marriage because of the perception that it demonstrates a relationship of mistrust, or because they feel that it is predicting separation. The reality is that separation is not uncommon in contemporary Australia, and protecting your assets as well as your emotional wellbeing is never a bad idea.
There are numerous things that a BFA can cater for but broadly they cover financial settlement (including property and superannuation), financial support (including spousal maintenance) and any incidental issues. The BFA can be broad to encompass all assets of a relationship or marriage, or it may be specific in dealing with only one or a few large assets. Below are some common scenarios and the arrangements that people may put in place:
- Parties whom enter a relationship where one or both parties has significant assets may enter a BFA to provide that upon separation those assets will remain with the party whom had them prior to the relationship, and any assets obtained during the relationship are to be shared equally;
- Parties whom have separated divide their assets according to amicable negotiations and agreement; or
- Parties that are unable to finalise their financial relationship by way of consent orders for one reason or another.
Any agreement that you and your partner reach need to be specifically tailored for your situation. There is also a requirement that each party obtains independent legal. This must take place prior to both parties signing the agreement otherwise it is not binding on the parties.
A BFA is usually a solid legal instrument that binds parties, however, you must be aware that there are some exceptions to this. Situations, where this may occur, include where there has been an incident of fraud, where the agreement is void, voidable or unenforceable for legal reasons, where the agreement is impractical to enforce, where there is been a material change in circumstance relating to children, or where a party to the agreement has acting in an unconscionable manner. Similarly, parties who have entered into a BFA can enter into a further financial agreement to terminate the original BFA if they no longer wish for it to apply.
This article contains generalisations and should not be considered legal advice. If you already have a BFA, or are interested in exploring the option further, please contact one of our family law solicitors on 07 5574 0971 who can consult with you in a free initial appointment to take your personal circumstances into consideration and advise accordingly.