Binding Financial Agreements - What Do I Need To Know?
What the family law courts refer to as a Binding Financial Agreement (BFA), we may more often refer to as:
- a pre-nuptial agreement (pre-nup)
- a post-nuptial agreement (post-nup)
- a cohabitation agreement
- a separation agreement
We see reports on the news and even movies and TV shows on the topic, very often sensationalising famous legal cases. But in reality, there are some key things that need to be understood.
What does a BFA do?
Essentially a BFA is an agreement that a couple in a relationship make, outlining a division of their assets that is acceptable to all, should they separate or if they have separated.
The BFA will come into effect immediately if it is a separation agreement or when a relationship breaks down if it is a pre-nup, post-nup or cohabitation agreement. The BFA can minimise the stress of separation, meaning that the couple ‘split up’ amicably. The BFA can also avoid the need for family law courts to interfere with the agreed division of assets.
When should we prepare a BFA?
You can arrange a BFA at any point before, during or after a relationship or marriage, but very often this is done at the start of cohabitation or before marriage. It should be entered into quite a while before the marriage so there is no suggestion of coercion.
Are they binding by law?
A BFA will be binding as long as it has been drafted in accordance with the law and that appropriate legal advice has been given to each party. In family law, there are criteria that need to be met, otherwise the agreement may be void. This is why it is vital to engage the services of experienced lawyers for legal advice before entering into an agreement and to draft the document.
It is recommended that BFAs should be reviewed by your lawyers if there are significant changes in your life circumstances such as having children, or receiving an inheritance etc.
What do BFAs cover?
- financial settlement (inclusive of superannuation)
- financial maintenance of one partner by the other
- incidental matters such as child support
What does your lawyer need to know?
Certain information should be provided to your lawyers so that they can give appropriate legal advice regarding your BFA:
- personal details for the parties and any children
- occupations and earning potential
- superannuation entitlements
- all assets and their value
- market value of properties
- liabilities such as mortgages, loans and debts
- any other agreements in place
- date when cohabitation began or parties are married
- date when the parties propose getting married
- previous marriages
How will a BFA benefit me?
The main benefit is that if a BFA is properly drafted and appropriate advice is given, it can provide a level of reassurance and security for a couple, knowing that their agreed wishes will be upheld should they separate or if they have separated. Unnecessary unpleasantness and expense can be avoided, and the separation should be finalised in a smooth and timely fashion, without involving the family law courts.
A legal Binding Financial Agreement can be significantly reassuring for both parties in a relationship, minimising financial outlays and emotional stress.
Lawyers experienced in these matters will be able to advise you on your own particular set of circumstances before putting pen to paper. They will also help you review your BFA as things change in your life.
Cairns Divorce Lawyers have many years of experience in family law, so let us guide you through the legal process of setting up your Binding Financial Agreement.