Binding financial agreements
Expert binding financial agreements lawyer in Adelaide
Binding financial agreements (BFAs) are often a smart way to reduce financial risks and avoid future conflict. They can set out what will happen if your relationship ends, so they’re worth thinking about for many couples.
If you’re wondering whether a BFA is right for your situation, understanding your needs and obligations is an excellent starting point. Here’s some important information about BFAs and how they work.
Get in touch to learn more about how we can help you.
Frequently asked questions about binding financial agreements
What is a binding financial agreement?
A BFA is often referred to as a pre-nuptial agreement.
It’s a legal document that protects your property and assets if you separate or divorce.
A BFA can be entered into before, during or after the breakdown of a relationship.
BFAs are often used to reduce financial risks and avoid future conflicts. With more than one-third of marriages and de facto relationships in Australia ending in separation, having a BFA in place can give you the peace of mind of knowing exactly how your assets will be divided if you separate.
BFAs can be made for:
- Property division
- Spousal maintenance
- Superannuation
Is a binding financial agreement enforceable?
The BFA is enforceable if prepared according to legal requirements and correctly drafted.
BFAs are fantastic because they allow you and your partner to decide how you want to deal with the relationship assets rather than being confined to the family laws that would otherwise apply.
If you recently started a new relationship and have significant assets already, a BFA can help you:
- ‘Preserve’ or ‘quarantine’ them; and
- Ensure they don’t later form part of any property pool available for distribution
If you recently separated and are considering a BFA, it’s important to understand that for married couples, a BFA must be made within twelve months of a divorce order.
What are the different types of binding financial agreements?
Different types of BFAs exist for different reasons.
We can draft enforceable BFAs for the following situations:
- Before starting a new de facto relationship
- During a de facto relationship
- At the end of a de facto relationship
- Before a marriage
- During marriage, including separation but before divorce
- After divorce
Can the Court cancel a binding financial agreement?
In rare circumstances, the Federal Circuit and Family Court of Australia can intervene and set aside a BFA. Setting aside a BFA means the Court will decide it’s invalid.
Some reasons why the Court may set aside a BFA include:
- One party didn’t disclose all assets or debts
- One party was pressured or forced to sign the BFA
- It is significantly unfair to one party
- The parties didn’t get independent legal advice before making the BFA
- There are new and exceptional circumstances affecting a child of the relationship
Contact us for advice if you wish to apply to the Court to set aside a BFA.
What’s the difference between consent orders and binding financial agreements?
You can make a BFA at any stage of your relationship, but consent orders can only be made after your relationship has broken down.
The Court can only make consent orders if there is a fair agreement for both parties (regardless of whether they are willing to consent to unfair terms). However, BFAs are private contracts, so involving the Court is unnecessary. If something goes wrong, the Court enforces consent orders. If there’s a BFA in place, the Court may have to decide whether it’s valid. If the BFA is valid, it will be enforced because family laws don’t apply.
If you’re considering a BFA, you’ll need legal advice from a binding financial agreement lawyer. Contact us to find out more about our family law services.
What are the most important things to consider when making a binding financial agreement?
When entering into a BFA, follow these golden rules to reduce the chances of your agreement being set aside:
Disclosure
Don’t be tempted to skip disclosure. Both you and your partner should make full and frank disclosure before entering into a BFA. That means complete and honest sharing of information.
The disclosure process involves you and your partner exchanging original documents, such as:
- Bank statements
- Tax returns
- Loan agreements
- Share statements
- Valuations
- Tax returns
- Payslips
- Any other document that is proof of your financial position.
Although complying with this obligation can mean increased legal fees, it may help you avoid your agreement being set aside for “material non-disclosure”.
Time
Both you and your partner must have adequate time to review and consider the financial disclosure information before finalising your BFA.
Remember that each party must get independent legal advice about the advantages and disadvantages of the agreement and how it will affect your family law rights. So, before signing the agreement, it’s also important to ensure that both you and your partner have enough time to:
- Consider the legal advice
- Ask any further questions
Pressure
If your partner is hesitant or raises concerns about agreeing, you must not pressure them to ‘get it done’. If a party agrees but does so under duress, this may be grounds for the Court to set aside the agreement.
Regular reviews
Once you have your BFA, you should review it regularly, much like any other contract. We recommend reviewing it at least every two years, particularly if there has been a significant change in your circumstances, such as:
- The birth of a child
- A significant inheritance
- A major health diagnosis
Get in touch
BFAs are excellent in certain situations, but there are also some important concerns if you’re thinking about making one with your partner (or former partner).
Understanding the legal implications can be complex, and predicting a BFA’s future impact may feel impossible. That’s why legal advice is essential before you agree to a BFA.
We’re skilled binding financial agreement lawyers, offering trustworthy and affordable guidance to protect you and your loved ones.
Get in touch to learn more about our services for binding financial agreements.