Binding Financial Agreements
A Binding Financial Agreement (“BFA”) is a private legal agreement between two parties where they have agreed to “contract out” of the provisions of the Family Law Act, which would otherwise determine the division of property and financial resources in the event of the breakdown of a relationship.
BFAs can be entered into:
- before a de facto relationship;
- during a de facto relationship;
- after a de facto relationship has ended;
- before a marriage (commonly referred to as a prenuptial agreement);
- during a marriage;
- after a marriage has ended (before or after a divorce order has been made);
BFAs before or during a relationship
Where you and your partner both wish to clarify the ownership of your assets at the beginning of your relationship or during the relationship, and you have agreed how you wish to keep certain assets separate and divide other assets if your relationship comes to an end, then you may wish to consider entering into a BFA.
A BFA will need to cover:
- The assets and liabilities that you and your partner own individually and together, and the values of those assets;
- Details and values of any financial resources available to either party (for example, a trust or inheritance);
- In the event of the breakdown of a relationship:-
- Which assets each party will retain;
- Whether any assets will be divided (including assets acquired in the future, after the BFA has been entered into);
- Financial support (spousal and child maintenance);
- Children’s arrangements; and
- Any other relevant matters.
BFAs should also be reviewed regularly, particularly when there has been a substantial change in your relationship, for example, after the birth of a child, or one party receiving a lump sum payment (for example, an inheritance or personal injury claim payment).
BFAs after your relationship has ended
If your de facto relationship or marriage has come to an end, you and your former partner may wish to finalise your property settlement by entering into a BFA.
By entering into a BFA, you are contracting out of your rights to apply to the Federal Circuit Court or Family Court for property settlement orders under the Family Law Act.
You may consider entering into a BFA after your relationship has ended in a number of situations. This can include where you are outside of the time limits to bring an application for property settlement orders before the Court, or when you do not wish to apply to the Court for property orders and would instead prefer a private agreement made outside of the Court.
There are very strict requirements for a BFA to be valid and legally binding. Both parties must each obtain their own independent legal advice, and may also need to obtain their own financial advice, before signing the agreement.
When you enter into a BFA, it is also important that you review your Will and/or your Enduring Power of Attorney. Our family law lawyers and estate planning solicitors can provide you with advice and assist you in preparing your BFA and with any estate planning needs.
For over 60 years Finemore Walters & Story have provided caring, hands on advice to thousands of the region’s families, individuals, and institutions. Contact our Family Law Team today.
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