Family Law and Financial Agreements

What is a Binding Financial Agreement?

A Binding Financial Agreement or BFA is an agreement between 2 parties, who are either in an existing relationship or a relationship which has come to an end, where the parties record how they would like to arrange for the splitting of Financial Assets in the event of a breakdown of the relationship.

The BFA may include provisions relating to spousal maintenance, the splitting of superannuation, and other assets that the parties may own either in their own right or in joint names.

A BFA is not intended to address issues relating to the support and/or custody of children.

When can I use a BFA?

A BFA may be used by any party who is either in, coming out of, or contemplating entering into either a De Facto relationship or Marriage with another person. It can be used by same or opposite sex relationships. BFA can be created prior to, during or at the completion of a relationship.

Do I need a BFA

The decision to enter into a BFA is a matter of choice, however it can provide significant advantages in terms of certainty, legal protection, and cost savings. Whilst there is a cost in creating and completing a BFA, these costs are generally speaking significantly lower than then te benefits they provide, which could include, avoiding the payment of stamp duty in the transfer of a jointly held asset, or costs associated with uncertainty and negotiating a conflictual separation of assets.

Are there any formalities required for the agreement to be valid and binding?

In order for a BFA to be legally binding it is necessary for both parties to receive independent legal advice and a certificate confirming that they understand the advantages and disadvantages of entering into the proposed BFA. This is designed to ensure that parties fully understand their rights and obligations the BFA contains and the possible rights they may be waiving by entering into such an agreement and not relying on other remedies that may be available under the relevant family law legislation.

Can a binding financial agreement be challenged in court?

Like all Agreement, a BFA may be challenged in a court, by a party who feels that the BFA or provisions of the BFA should be overturned. There are certain circumstances where a court may uphold a challenge to validity of a BFA, however these are greatly reduced where they are professionally established with the support of appropriately qualified legal practitioners, and where both parties are willing to make full and complete disclosure of assets and liabilities, and where parties enter into the agreement of their own free will with full knowledge of the impacts of such agreements.

I have been acting as a lawyer in the area of advising parties on BFA’s for over 7 years, having advised and supported hundreds of clients in ensuring a smooth and equitable agreement in what is often an extremely stressful period of their lives.

Click here for the main reasons why a couple would enter into a financial agreement.

Should you have any initial questions, please contact us direct for a no obligation consultation.