No one ever wants to contemplate the possibility of their relationship breaking down, but a binding financial agreement will save you stress and heartache if it does happen. If you are in possession of significant assets, a BFA is a practical way to protect both of your financial futures.  If you are looking for a lawyer in Sydney to help with any legalities regarding your Binding Financial Agreement, or for further information in relation to Binding Financial Agreements, please do not hesitate to contact any member of our Family Law Team.

 

I have a question about:

  • What is a Binding Financial Agreement?

    A Binding Financial Agreement (BFA) is a legally binding, written agreement between two or more people that complies with Part VIII to VIIIAB of the Family Law Act 1975 (Cth). It sets out the parties’ agreement as to their intended financial arrangements in the event of a breakdown or as a result of a breakdown. The ultimate purpose of a Binding Financial Agreement is to avoid the need of having the matter dealt with by the Family Court.

  • Who can enter into a Binding Financial Agreement?

    • De Facto couples whether same sex or not
    • Married couples
    • Couples who are separated
    • Divorced couples; and
    • Couples simply living together
    • BFA’s can be entered into before, during or after a relationship.

  • What are the different types of BFA's?

    The type of Binding Financial Agreement you require will depend on several factors such as whether you are already living together, your current relationship status, and whether you intend for that to change. As such, your agreement could be:

    • Pre-nuptial agreements (those made in contemplation of marriage)
    • Post-nuptial agreements (those made after a marriage)
    • Cohabitation agreements (those made in contemplation of, or during a de facto relationship)
    • Separation agreements (those made in the breakdown of a marriage or de facto relationship)
    • Divorce agreements (those made after a divorce)

  • What does a Binding Financial Agreement cover?

    • Division of wages and arrangements if one party ceases working to look after children
    • How any property acquired during the relationship will be held whether jointly or by one party with the other contributing, or solely to the exclusion of the other party.
    • What happens with any debt either party acquires during the relationship whether jointly or separately.
    • What happens with any assets each of you already owns, and any debt either of you already has.
    • What happens with any assets and liabilities including superannuation if the relationship were to break down.
    • Whether one party will pay the other any spousal maintenance after separation.
    • If you have children in the future, how these agreed arrangements will vary.

    It is important to note that a BFA does not cover the custody of any children within the relationship. This must be handled as a separate matter in the Family Court.

  • What are the advantages of a Binding Financial Agreement?

    • Agreeing on the arrangements if you separate is much easier to decide on when both parties are happy and amicable in the relationship.
    • A Binding Financial Agreement can be used to create separate asset pools for before, and during, the relationship, allowing you to deal with each pool in a different manner.
    • A BFA is faster than waiting for the court to review and stamp consent orders.
    • A BFA can include provisions for spousal maintenance, child support and Succession Act Deeds of Release all in the one document.

  • What are the disadvantages of a Binding Financial Agreement?

    • As a Binding Financial Agreement contracts you out of the court system, there is no regulatory body to review the terms of the Binding Financial Agreement, whereas consent orders are reviewed by the court to ensure they are just and equitable.
    • Raising the topic of a Binding Financial Agreement with your partner can create hostility in the relationship and a sense of distrust.
    • A Binding Financial Agreement cannot be varied, any changes must be done by way of a new Binding Financial Agreement voiding the previous agreement.
    • A BFA cannot include arrangements for children that are not financial e.g. time with each parent.
    • There are circumstances where a Binding Financial Agreement can be set aside.

    In deciding whether you want a Binding Financial Agreement, one of the most daunting parts is raising the topic with your partner.

  • How do I discuss with my partner the possibility of a BFA?

    • Start with an open and honest conversation in respect to finances, assets, and arrangements you would both like to see happen during the relationship.
    • Usually, a party will happily enter into a BFA to show they are in the relationship for the right reasons.
    • Discuss each of your financial goals and morals, and whether one party may want to quarantine their assets where another may wish to share them.
    • Some people say that their relationship improves with a BFA in place as there is no doubt about arrangements and moving forward each party knows exactly where they stand.
    • If you have differing views in respect to contributions and entitlements in the relationship, or if one party is against the idea of a BFA, perhaps it is time to really assess the expectations each party has going forward in the relationship and whether they are there for the right reasons, or whether the arrangement you are seeking is fair.

    For a financial agreement to be binding, it must be signed by all parties. Furthermore, all parties to the agreement must have received independent legal advice before signing the agreement.

  • What makes a financial agreement "binding"?

    For a financial agreement to be binding, it must be signed by all parties.  Furthermore, all parties to the agreement must have received independent legal advice before signing the agreement.

  • Can a financial agreement include parties other than the parties to the relationship?

    Yes, a financial agreement can include third parties such as family members, family companies, trusts and creditors.

    When family members are involved, a financial agreement could be a way for that family member to protect any money that they may have lent the married or de facto couple.

    Those third parties will need to obtain their own independent legal advice and that could increase the costs overall. However, often given the amount of financial assistance given by third parties, those costs are often justified in the long run, based on the protection a binding financial agreement can give a third party.