Protect your Financial Future with a Binding Financial Agreement (BFA)
Whether you’re entering a relationship, navigating its complexities, or ending one, a Binding Financial Agreement (BFA) offers you peace of mind by clearly outlining the division of assets and liabilities.
Our expert legal team at Pearsons Lawyers is dedicated to helping you draft a tailored agreement that suits your personal needs, ensuring your interests are safeguarded at every stage. With a BFA, you can plan ahead, avoid unnecessary conflicts, and secure your financial stability.
In this article, we will explore the ins and outs of BFAs, how they work, and why they are critical for your financial well-being. Let’s delve into the details of BFAs, understand their benefits, and address commonly asked questions to help you make an informed decision.
Key Takeaways
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- Protection of Assets: BFAs provide legal protection for your assets and clarify financial matters in relationships.
- Multiple Stages: BFAs can be established before (prenuptial), during (cohabitation), or after (postnuptial) a relationship.
- Property and Support: They cover property division, spousal support, and child support arrangements.
- Legal Requirements: Must adhere to Family Law Act guidelines and require independent legal advice.
- Flexibility: BFAs offer more flexibility than Consent Orders and can prevent costly legal battles.
- Enforceability: Properly drafted BFAs are enforceable in Australia.
- Complexity: Disadvantages include potential for disputes if not correctly drafted and financial stress.
- Expert Guidance: Essential to seek expert legal and financial advice for drafting and execution.
- Termination: Requires mutual consent or court intervention, highlighting the importance of legal advice.
What Are Binding Financial Agreements (BFA)?
A Binding Financial Agreement (also known as a BFA) may be entered into by a couple before a relationship (prenuptial agreement), during a relationship (cohabitation agreement), or when a relationship ends (postnuptial agreement).
It’s a legal document that outlines how assets and liabilities will be divided if or when a marriage or de facto relationship breaks down. It is a written agreement and a legal document that outlines how assets and liabilities will be divided if or when a marriage or de facto relationship breaks down. It can cover child support, spousal maintenance, and property settlement agreements.
Our highly skilled team at Pearsons Lawyers can advise and guide you on all aspects of such agreements. Call our specialist family lawyers for your first FREE appointment so you know where you stand.
How Do Binding Financial Agreements Work?
A Binding Financial Agreement outlines property distribution and how financial settlement will occur if a relationship ends. It can also include other practical issues, such as where children will live or who will take care of a business both parties are involved in.
A BFA can be made before, during, or after a relationship. Unlike Consent Orders, which are finalised after a divorce or separation, BFAs offer the flexibility to plan ahead. This allows both parties to feel secure knowing what their future holds. It can also alleviate the need for unnecessary arguments and costly legal expenses in the event of relationship issues.
Both parties will feel secure knowing that they have a legally binding family law financial agreement in place and clear guidelines to work from in the event of relationship breakdown.
Prenuptial Agreements & Cohabitation Agreements
Many couples use prenuptial agreements (or cohabitation agreements) to agree on an acceptable division of assets and liabilities should their relationship fail. This may be done before marriage, when both parties move in together, or when both parties feel the relationship is getting more serious.
Our specialist team of Family Lawyers have many years of experience in advising and preparing Binding Financial Agreements after a relationship breakdown. We ensure that our clients have the right advice before making an agreement, ensuring financial certainty and security in the future and protecting assets and income from future claims.
“Just as every family is unique, every separation is as well. In the decades of practising Family Law we have had the privilege of observing so many different situations and assisted parties untangle their children’s issues and financial matters. In the end, the aim is to ensure that the desired outcome is achieved.”
Postnuptial Agreements, Or Consent Orders?
Financial agreements can be made between two parties after a relationship ends, in place of Consent Orders, to formalise a splitting of assets.
Binding Financial Agreements (BFAs) offer greater flexibility and can address issues like pre-nuptial agreements, financial resources, and property agreements. However, they require independent legal advice and may not fully avoid court intervention if improperly drafted.
Consent Orders are court-approved, ensuring enforceability and providing a clear, structured resolution of asset pools and liabilities. But, they involve a more rigid and formal process, which can be lengthy and costly due to court involvement.
Whether you are entering a relationship, planning for the future, or seeking clarity during a separation, we’ll ensure you have the advice and personalised solutions that suit your unique needs.
Frequently Asked Questions
Do binding financial agreements stand up in Court?
Binding financial agreements, including pre-nuptial agreements, stand up in Court if properly drafted. They help parties feel secure knowing their financial resources and asset pool are protected, avoiding unnecessary arguments.
Why do I have to obtain independent legal advice?
Independent legal advice ensures binding financial agreements are enforceable, addressing key points like the party’s liabilities and future capacity. It helps avoid informal agreements and provides clarity on property agreements and financial resources.
Is a binding financial agreement made under the Family Law Act?
Yes, a binding financial agreement is made under the Family Law Act. This includes pre-nuptial agreements that address financial resources, a party’s liabilities, and asset pool distribution.
Is it worth getting a binding financial agreement?
Yes, for many couples, binding financial agreements offer clarity on financial resources and asset pool, helping parties avoid sensational newspaper stories and unnecessary arguments. They provide security for future capacity and protection for previous relationships. It’s essential to seek legal and financial advice about what will best suit your needs.
What can be included in a BFA?
Binding Financial Agreements Can encompass:
(i) Spousal support
Both parties can enter into an agreement that neither will seek financial support from the other party. This ensures security concerning ongoing financial support for your former partner. Alternatively, you can have a Binding Financial Agreement, which makes provision for regular ongoing periodic financial support from your former partner, but this is in rare circumstances and would be when your spouse is unable to work.
(ii) Property Arrangements
Binding Financial Agreements can finalise property arrangements between the parties where the option of having a Consent Order ratified by the Court is not available either because the parties choose not to have a Court seal or alternatively, the agreement is one which the Court would not approve because it is outside the range of what the parties could expect to receive from the Family Court.
Sometimes entering into a Binding Financial Agreement can be quicker than seeking a Court Order.
What is a binding child support arrangement?
Binding Child Support Agreements are often prepared when parties want to formalise child support arrangements to include not only periodic child support as assessed by the Child Support Agency but also may include other expenses such as:
- Educational costs, including school fees, books, uniforms and camps; and
- Health costs include private health insurance and out-of-pocket expenses for medical, dental, orthodontal, chiropractic, osteo, etc.
- Extracurricular activity
These Binding Child Support Agreements can be registered with the Child Support Agency and can also filed with the Family Court.
What are the differences between a prenuptial agreement and a consent order?
A Binding Financial Agreement is an alternative to Consent Orders, which finalise property matters between parties through a formal Court Application and minute of the proposed Orders sought by agreement.
Usually, one of the parties’ lawyers prepares the documents, which are signed by both parties and filed with the Court. A Registrar of the Court reads the documents and assesses whether the agreement is within the range of what the Court would generally expect.
The Court then seals the Orders without needing either parties or solicitors to attend Court, and the Orders are released. These Orders are final, enforceable, and remain on the Court file. Consent Orders must be deemed fair and just by the Courts to be approved.
What’s a termination agreement?
A termination agreement voids an existing binding financial agreement necessitated by relationship breakdowns or significant changes. It must adhere strictly to Family Law Act guidelines, including signed acknowledgments from all involved parties.
What are the typical costs associated with a binding financial agreement?
Costs can vary based on complexity and legal fees. It is advisable to consult with your lawyer to discuss potential fixed fees or hourly rates. You should also consider that additional fees will apply if you are working collaboratively with taxation specialists or financial planners.
Is it advisable to obtain a binding financial agreement?
Depending on your circumstances, a binding financial agreement can offer clarity and certainty regarding the financial aspects of relationships. If the relationship ends, it can protect existing assets and inheritances and minimise legal expenses. However, it must be very carefully drafted to ensure it meets the necessary criteria, and both parties must have received independent legal advice.
Is it possible to challenge a binding financial agreement?
Yes, under specific conditions such as improper drafting, non-voluntary signing, or inadequate legal advice, BFAs may be challenged in court. Seeking legal guidance is essential for contesting an agreement.
What types of Binding Financial Agreements exist?
BFAs can be established before, during, or after a relationship, encompassing marriages and de facto relationships. They regulate property settlement, spousal maintenance, and financial support, tailored to individual circumstances and meeting stringent legal requirements for enforceability.
Are binding financial agreements enforceable in Australia?
Binding financial agreements are enforceable in Australia if they are appropriately drafted and parties obtain independent advice. These agreements can include pre-nuptial and post-nuptial agreements, covering asset pools, superannuation entitlements, and agreed property distribution.
Can I write my own binding financial agreement?
Writing down what you’d like in your binding financial agreement is fine, but you must ensure that a lawyer drafts your agreement. Properly drafted agreements require expert advice to ensure they meet legal standards. Independent advice is crucial to avoid future legal disputes and ensure the agreement is enforceable.
How do you terminate a binding financial agreement?
Terminating a binding financial agreement requires mutual consent or court intervention. Parties must agree, or the court may decide based on circumstances like relationship issues. Obtaining expert advice is crucial to navigating termination without stressful court action.
What are the disadvantages of a binding financial agreement?
Disadvantages of binding financial agreements include financial stress if not correctly drafted, the potential for future disputes, and the need for independent advice. Without proper legal guidance, agreements may lead to court delays, unresolved liabilities, and stress for future generations.
